Homework Answers
Answer : $1600
Calculated as
High point is in May 9000 units cost is $7000
Low point is in March 4000 units cost is $4000
Variable cost per unit = Difference in High and low point cost/Difference in high and low point units
= ($7000-$4000)/(9000-4000)
= 0.60 per unit
Fixed cost = Total cost at 4000 units - Variable cost of 4000 units
= $4000 - 4000 * 0.60
= 4000-2400
= $16000
Hence answer is $1600
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