Riley Corporations income statements for the last two years are presented below. Riley manufactured 7,500 and 10,500 school desks in 2020 and 2019, respectively and had no beginning or ending inventories.

2019 2020

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

Net profit $1,396,800 $2,638,490

Instructions

a) Estimate the companys total variable cost per unit and its total fixed costs per year using the high-low method.

b) What is the equation of the line using the high-low method?