Question: Shatner 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.

Shatner 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 Total

Produced Cost

7,500 …………………$600,000

12,500 ……………….. 725,000

20,000 ……………….. 800,000

(a) Determine the variable cost per unit and the fixed cost.

(b) Based on part (a), estimate the total cost for 10,000 units of production.

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