Question: Diamond Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost.

Diamond Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:

Units Produced Total Costs

12,000..................... $424,000

15,000..................... 496,000

21,000..................... 640,000

a. Determine the variable cost per unit and the total fixed cost.

b. Based on part (a), estimate the total cost for 17,000 units of production.

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