PROBLEM I 10 POINTS Global Publishers has collected the foll

PROBLEM I (10 POINTS) Global Publishers has collected the following data for recent months: Month March April May June Issues published 20,500 21,800 17,750 21,200 Total cost $20,960 22,464 18,495 21,395 Required: (a) Using the high-low method, find variable cost per unit, total fixed costs, and the total cost equation. (b) What is the estimated cost for a month in which 19,000 issues are published?

Solution

(a) Variable cost per unit = ($22,464 – $18,495) / (21,800 – 17,750) = $0.98 per unit

Total fixed costs = $18,495 – (17,750 x $0.98) = $1,100

Total cost = $1,100 + ($0.98 x number of issues published)

(b) Total cost = $1,100 + ($0.98 x 19,000) = $19,720