Ingram Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, what is the variable cost per unit at the 3,500 level of operations?

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5 January, 11:52

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Giselle Barnett · Answer 1

The average variable cost per unit is

... (84400 - 46000) / (3500 - 1100) = 38400/2400 = 16

The variable cost per unit is estimated at $16.