Question

Harlan Gravity Grips produces spike sets for track shoes. CEO Brittany Harlan has gathered the following information about the company’s sales volume and marketing cost for the past six months. Sales Volume Total Marketing Costs January 550,840 $82,788 February 390,728 $72,871 March 561,080 $83,092 April 543,000 $82,188 May 546,336 $82,492 June 552,544 $82,864 Collapse question part (a) Using the high-low method, compute the variable marketing cost per spike set. (Round unit cost to 2 decimal places, e.g. 12.50.) Variable marketing cost = $ per spike set sold

Answer 1

0.06 per spike set sold

Step-by-step explanation:

The computation of the variable marketing cost per spike set is shown below:

Variable cost per spike set = (High total marketing cost - low total marketing cost) ÷ (High sales volume - low sales volume )

= ($83,092 - $72,871) ÷ (561,080 - 390,728)

= $10,221 ÷ 170,352

= 0.06 per spike set sold

Hence, the variable marketing cost per spike set is $0.06