Question

fremont which uses the high-low method reported total cost of $10 per unit its lowest production level, 5000 units. when production tripled to its highest level, the total cost per unit dropped to $5 variable cost per unit

Answer 1

Answer:

$2.50

Step-by-step explanation:

Calculation for the estimation of variable cost per unit

Units Total cost

High method 15,000×$5 per units =$75,000

(5,000*3)=15,000

Low method 5,000*$10 per units=$50,000

Difference 10,000 $25,000

Variable cost per unit =$25,000/10,000

Variable cost per unit=$2.50

Note: Based on the information given we were told that production tripled to its highest level which means the high method units will be 15,000 units (5,000 units*3)

Therefore Fremont would estimate its variable cost per unit as: $2.50