A wholesaler of custom-built air-conditioning units for commercial buildings gathered the following monthly data relating to units shipped and total shipping expense: Month Unita shipped Total shipping expense January 2 $2,000 February 5 $2,500 March 3 $1,900 April 4 $2,200 May 6 $2,500 1 June 7 $3,120 July 1 $1,400 Using the high-low method estimate the cost formula for shipping expenses, calculate the variable shipping expense as well as fixed shipping expense per unit.

Respuesta :

Answer:

Variable shipping expense per unit = $350

Fixed shipping expense = $1,050

Explanation:

Variable shipping expense per unit = [Highest total cost - Lowest total cost]/[Highest level - Lowest level]

Variable shipping expense per unit = (3,500 - 1,400) / (7-1)

Variable shipping expense per unit = $350

Fixed shipping expense =  Highest total cost - [(Variable shipping expense per unit)(Highest level)]

Fixed shipping expense = 3,500 - [(7)(350)]

Fixed shipping expense = $1,050.