High$-$Low

With your Total Fixed Cost and Variable Cost per Unit from the high$-$low method, compute the total cost for the following values of $N($Number of Units Produced$).$

Why does the total cost computed for $4,360$ units not match the data for January?

a$.$ The high$-$low method is accurate only for months in which production is at full capacity.

b$.$ The high$-$low method only gives accurate data when fixed costs are zero.

c$.$ The high$-$low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.

d$.$ The high$-$low method gives accurate data only for levels of production outside the relevant range.

Contribution Margin