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 1,740 $224,460 3,060 338,440 4,640 349,160 a. Determine the variable cost per unit and the total fixed cost. Variable cost: (Round to the nearest dollar.) per unit Total fixed cost: b. Based on part (a), estimate the total cost for 2,300 units of production. Total cost for 2,300 units: 4 High-Low Method The manufacturing costs of Rosenthal Industries for the first three months of the year follow: Total Costs Production January $300,960 2,640 units February 446,090 4,740 March 468,160 7,040 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. a. Variable cost per unit 38 b. Total fixed cost 33,440 x Feedback Check My Work a. Divide the difference between the highest and lowest total costs by the difference between the highest and lowest production units. b. Multiply the variable unit cost by the number of units for a month. Subtract this variable cost from the month's total cost to arrive at the total fixed cost. The resulting amount should be the same for either the highest or lowest production month High-Low Method for a Service Company 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 $1,463,800 316,000 February 1,632,000 353,000 March 1,153,400 229,000 April 1,564,700 342,000 May 1,312,400 275,000 June 1,682,500 372,000 Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (Round to two decimal places.) per gross-ton mile Total fixed cost