Asked by
Tiera Winston
on Nov 12, 2024
Verified
The manufacturing cost of Calico Industries for three months of the year are provided below. 
Using the high-low method, the variable cost per unit and the total fixed costs are
A) $0.78 per unit and $4,000
B) $0.40 per unit and $8,000
C) $4.00 per unit and $800
D) $7.80 per unit and $4,000
High-low Method
A cost accounting technique used to estimate variable and fixed costs based on the highest and lowest levels of activity within a given period.
Variable Cost
Costs that vary directly with the level of production or sales volume. They include raw materials, labor directly involved in production, and sales commissions.
Total Fixed Costs
The sum of all costs that remain constant regardless of the level of production or sales.
- Employ the high-low approach to ascertain the constant and fluctuating elements of expenses.
- Understand the implications of changes in fixed and variable costs on operating income.
Verified Answer
BS
Learning Objectives
- Employ the high-low approach to ascertain the constant and fluctuating elements of expenses.
- Understand the implications of changes in fixed and variable costs on operating income.