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Exercise #3: High / Low Method Using the information below, (a) calculate the variable and fixed-cost elements using the high
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Answer #1

(a) Variable cost per unit = ($14,740 - $11,100) / (9,800 - 7,000) = $1.30 per unit

Fixed cost = $14,740 - ($1.30 × 9,800) = $2,000

(b) Total cost to produce 8,000 units = ($1.30 × 8,000) + $2,000 = $12,400

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