Problem:
Fremont, which uses the high-low method, reported total costs of $10.40 per unit at its lowest production level, 4,000 units. When production tripled to its highest level, the total cost per unit dropped to $6.50.
Required:
Fremont would estimate its variable cost per unit as
a. $4.55
b. $16.90
c. negative $0.000812
d. $6.50
Note: Please show how you came up with the solution.