Zerbel Company a wholesaler of large custombuilt airconditio

Zerbel Company, a wholesaler of large, custom-built air-conditioning units for commercial buildings, has noticed considerable fluctuation in its shipping expense from month to month, as shown below: Total Shipping Expense $5,100 $6,540 $5,721 $3,420 $ 4,718 $6,403 $11,820 Units MonthShipped January February March 4 ril May June July 19 Required 1. Using the high-low method, estimate the cost formula for shipping expense

Solution

Variable cost per unit = Change in cost/change in unit

= 11820-3420/19-4

Variable cost per unit = 560 per unit

Fixed cost = Total cost-Variable cost per unit

= 11820-(560*19)

Fixed cost = 1180

Y=	1180	+	560	X