Answer:
Variable cost per unit= $4
Explanation:
Giving the following information:
Georgia had total costs of $50,000 at its lowest level of activity when 5,000 units were sold. When, at its highest level of activity, sales equaled 12,000 units, total costs were $78,000.
Using the high-low method, we need to use the following formula to determine the unitary variable cost:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (78,000 - 50,000) / (12,000 - 5,000)
Variable cost per unit= $4
Georgia's estimate variable cost per unit will be the option C $4.00.
Variable Cost Per Unit
We are provided with these informations, Total Costs when 5000 units was sold = $50,000. This lowest activity cost and lowest acitivity units.
Total Costs was $78000 when the 12000 units sold. This is highest activity cost, and highest activity units.
The Formula for variable cost per unit is:
Variable cost per unit= (Highest activity cost - Lowest activity cost) divided by (Highest activity units - Lowest activity units)
Variable cost per unit= (78,000 - 50,000) / (12,000 - 5,000)
= $4
Therefore, the correct option is C $4.
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