Hi-Tech Company sells small labeling machines for $60 each. Expected units, sales, and total costs in the next four quarters are as follows:

a. What are fixed costs? Assume that the linear relationship assumption is appropriate within the relevant range of 0 to 15,000 units. The company uses the high–low method to separate total costs by cost behavior.

b. What is the contribution margin per unit?

c. Is it appropriate to use this information to project operating income at 20,000 units? Why or why not?

d. For which decisions is this information useful when costs are broken down by cost behavior?

e. What other internal and external information would be relevant to understand profit predictions, pricing, performance evaluation, and customer demand?

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Period Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total for year Units 5,000 8,000 9,000 13,000 35,000 Sales $300,000 $480,000 $540,000 $780,000 $2,100,000 Total costs $205,000 $280,000 $315,000 $405,000 $1,205,000