1. Calculate the variable cost per unit using the high low method of analysing semi-variable cost.

Activity level	Units	Cost $
High activity	8,000	9,800
Low activity	5,000	7,400
Change	3,000	2,400

1. $0.8 per unit
2. $1.25 per unit
3. $0.68 per unit
4. $0.82 per unit

2. Using the data given in question (1) above. What will be the fixed cost for this situation?

$8, 000

$3,400

$17,200

$2,400

3. Which of the following statements best describes variable costs?

1. Increases on a per unit basis as the number of units produced increases
2. Increases as activity level increases
3. Remains the same in total as production increases
4. Decreases on a per unit basis as the number of units produced increases