6.13.14

High-low method

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
99,500			$31,168,250
118,500			34,654,750
131,500			37,040,250

1. Determine the variable cost per unit and the total fixed cost. Round your answer for variable cost to the nearest cent. Round your answer for total fixed costs to the nearest dollar.

   Variable cost:	_____ per unit
   Total fixed cost:	$______

2. Based on part (a), estimate the total cost for 83,000 units of production. Round your answer to the nearest dollar.

   Total cost for 83,000 units:

   $_______

Sales mix and break-even sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $588,000, and the sales mix is 60% bats and 40% gloves. The unit selling price and the unit variable cost for each product are as follows:

Products	Unit Selling Price		Unit Variable Cost
Bats	$90		$60
Gloves	130		75

1. Compute the break-even sales (units) for the overall enterprise product, E.

   ______ units

2. How many units of each product, baseball bats and baseball gloves, would be sold at the break-even point?

   Baseball bats:	_____ units
   Baseball gloves:	_____ units