Ask Question
28 October, 15:36

Georgia uses the high-low method of estimating costs. Georgia had total costs of $50,000 at its lowest level of activity, when 5,000 units were sold. When, at its highest level of activity, sales equaled 12,000 units, total costs were $78,000. Georgia would estimate variable cost per unit as

a. $6.50

b. $10.00

c. $4.00

d. $7.53

+4
Answers (1)
  1. 28 October, 15:53
    0
    Variable cost per unit = $4

    Explanation:

    Giving the following information:

    Georgia had total costs of $50,000 at its lowest level of activity when 5,000 units were sold. When, at its highest level of activity, sales equaled 12,000 units, total costs were $78,000.

    Using the high-low method, we need to use the following formula to determine the unitary variable cost:

    Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

    Variable cost per unit = (78,000 - 50,000) / (12,000 - 5,000)

    Variable cost per unit = $4
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Georgia uses the high-low method of estimating costs. Georgia had total costs of $50,000 at its lowest level of activity, when 5,000 units ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers