Riley Corporations income statements for the last two years are presented below. Riley manufactured 7,500 and 10,500 school desks in 2022 and 2021, respectively and had no beginning or ending inventories.

2022 2021

Sales $3,750,000 $5,250,000

Cost of Goods Sold 258,000 332,850

Gross profit 3,492,000 4,917,185

Operating expenses 2,095,200 2,278,695

Operating Income $1,396,800 $2,638,490

Instructions

1. Estimate the companys total variable cost per unit and its total annual fixed costs using the high-low method. (4 marks)
2. What is the equation of the line using the high-low method? (1 mark)