To follow is information about the units produced and total manufacturing costs for snow enterprises for the past six months. using the high-low method, what will the total monthly manufacturing costs be if the company produces 7,500 units?
month number of units produces total manufacturing costs
january 7800 $8150
february 7500 $8000
march 6600 $7550
april 6800 $7650
may 4500 $6500
june 7000 $7750

a. $3,915
b. $5,790
c. $1,875
d. $3,860

$8,000

Explanation:

To compute the total cost, first we have to calculate the fixed cost and the variable cost per hour by using high low method is shown below:

Variable cost per hour = (High manufacturing cost - low manufacturing cost) ÷ (High units produced - low units produced)

= ($8,150 - $6,500) ÷ (7,800 units - 4,500 units)

= $1,650 ÷ 3,300 units

= $0.5

Now the fixed cost equal to

= High manufacturing cost - (High units × Variable cost per unit)

= $8,150 - (7,800 units × $0.5)

= $8,150 - $3,900

= $4,250

To produce the 7,500 units, the total manufacturing cost would be

= Fixed cost + number of units produced × Variable cost per unit

= $4,250 + 7,500 units × $0.5

= $4,250 + 3,750

= $8,000

This is the answer and the same is not provided in the given options

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