Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow.

	Number of Units Produced	Total Cost
January	4,360	$65,600
February	250	6,250
March	1,000	15,000
April	5,250	56,250
May	1,750	32,500
June	3,015	48,000

1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.

Total Fixed Cost	Variable Cost per Unit

2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced).

Number of Units Produced	Total Cost
3,500
4,360
5,250

3. Why does the total cost computed for 4,360 units not match the data for January in the table at the top of this panel?

The high-low method gives accurate data only for levels of production outside the relevant range.

The high-low method only gives accurate data when fixed costs are zero.

The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.

The high-low method is accurate only for months in which production is at full capacity.