1. Ziegler 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
80,000	$25,100,000
92,000	27,206,000
120,000	32,120,000

Determine the variable cost per unit and the total fixed cost?

2. Continental Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Continental Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.

	Transportation Costs	Gross-Ton Miles
January	$24,500,000	3,000,000
February	22,375,000	2,500,000
March	29,000,000	6,300,000
April	34,800,000	9,500,000
May	40,312,500	12,750,000
June	35,500,000	10,000,000

Determine the variable cost per gross-ton mile and the total fixed cost.

3.

a. If Canace Company, with a break-even point at $960,000 of sales, has actual sales of $1,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?

b. If the margin of safety for Canace Company was 20%, fixed costs were $1,875,000, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)