Question

In: Finance

Thomas Train has collected the following information over the last six months.

Thomas Train has collected the following information over the last six months.

MonthUnits producedTotal costs
March10,000$25,600
April12,00026,200
May19,60028,000
June13,00026,450
July12,00026,000
August15,00026,500

Using the high-low method, what is the variable cost per unit?

Round to two decimal places.

Solutions

Expert Solution

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(28000-25600)/(19600-10,000)

which is equal to

=$0.25 per unit


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