Questions: Carla Vista Corp. has collected the following data concerning its maintenance costs for the past 6 months. Units Produced Total Cost ---------------------------- July 21,240 42,480 August 37,760 56,640 September 42,480 64,900 October 25,960 44,840 November 47,200 87,910 December 44,840 73,160 Compute the variable cost per unit using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.) Variable cost per unit square

Solution Steps

From the collected data, we identify the maximum and minimum units produced along with their corresponding total costs:

• Maximum Units Produced: \( 47200 \) (November)
• Maximum Cost: \( 87910 \)
• Minimum Units Produced: \( 21240 \) (July)
• Minimum Cost: \( 42480 \)

Next, we calculate the changes in total cost and units produced:

• Change in Total Cost: \[ \Delta C = 87910 - 42480 = 45430 \]

• Change in Units Produced: \[ \Delta U = 47200 - 21240 = 25960 \]

Using the high-low method, we compute the variable cost per unit using the formula: \[ \text{Variable Cost per Unit} = \frac{\Delta C}{\Delta U} = \frac{45430}{25960} \approx 1.75 \]

Final Answer