Estimate fixed costs and unit variable costs using the, Accounting Basics

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Estimate fixed costs and unit variable costs using the

Use the following data for the 4th quarter of 2009:

month	activity volume (#units)	total costs
Oct	90	$6,695
Nov	75	$6,850
Dec	105	$8,350

Required:

a) Estimate fixed costs and unit variable costs using the high-low method. (hint: should you use the observations with the highest/lowest activity, or highest/lowest costs?)

FC=

unit VC=

b) Based on the estimates from (a), what is the cost of producing 97 units?

c) Explain why you cannot use the estimates from (a) to predict costs at 5,000 units:

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Accounting Basics: Estimate fixed costs and unit variable costs using the

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Accounting Basics: Estimate fixed costs and unit variable costs using the

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