Question:
Kendra Corporation's total utility costs during the past year were $1,200 during its highest month and $600 during its lowest month. These costs corresponded with 10,000 units of production during the high month and 2,000 units during the low month. What are the fixed and variable components of its utility costs using the high-low method?
(a) $0.075 variable and $450 fixed.
(b) $0.120 variable and $0 fixed.
(c) $0.300 variable and $0 fixed.
(d) $0.060 variable and $600 fixed.