Response to the following problem:
Zeta Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:
|
Units Produced
|
Total Costs
|
|
45,000
|
$1,535,000
|
|
50 000
|
1,650,000
|
|
10.000
|
2,110,000
|
a. Determine the variable cost per unit and the fixed cost.
b. Based on part (a), estimate the total cost for 60,000 units of production.