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Course Name: Cost accounting

Q2 Abdulwahab Corporation is estimating the cost function for total cost of production of product A using the high-low method. The data collected for the past year is as following:

Number of units Total

Quarter produced Costs

1 4,000 $ 1,000

2 5,400 1,280

3 7,000 1,600

4 9,000 2,000

Calculate the following amounts: (Ch 2 Marks 4)

a. The variable cost per unit

b. The fixed cost

c. Explain the method used by the company to estimate the cost function. Suggest other methods than may be used to estimate cost function.

Answer:

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