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

W & O 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

10,000 $750,000

22,500 845,000

30,000 950,000

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

b. Based on part (a), estimate the total cost for 25,000 units of production.

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