Assume the following information is known for Simple Watches Company:

● The average sales price per unit is $37.

● Total costs at the lowest observed activity of 150 units are $3,822 and at the highest observed activity of 310 units are $5,902.

● The relevant range is from 0 units to 350 units.

● The company uses the high–low method to separate total costs into variable and fixed costs.

a. What are variable and fixed costs?

b. What is the contribution margin?

c. What is the operating income if 80 units are sold?