Georgia uses the high-low method of estimating costs. Georgia had total costs of $50,000 at its lowest level of activity, when 5,000 units were sold. When, at its highest level of activity, sales equaled 12,000 units, total costs were $78,000. Georgia would estimate variable cost per unit as

a. $6.50

b. $10.00

c. $4.00

d. $7.53

Georgia had total costs of $50,000 at its lowest level of activity when 5,000 units were sold. When, at its highest level of activity, sales equaled 12,000 units, total costs were $78,000.

Using the high-low method, we need to use the following formula to determine the unitary variable cost:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (78,000 - 50,000) / (12,000 - 5,000)

Variable cost per unit= $4

rowboatontario rowboatontario · Answer 2 · 2022-03-31T16:05:30+02:00

Georgia's estimate variable cost per unit will be the option C $4.00.

Variable Cost Per Unit

We are provided with these informations, Total Costs when 5000 units was sold = $50,000. This lowest activity cost and lowest acitivity units.

Total Costs was $78000 when the 12000 units sold. This is highest activity cost, and highest activity units.

The Formula for variable cost per unit is:

Variable cost per unit= (Highest activity cost - Lowest activity cost) divided by (Highest activity units - Lowest activity units)

Variable cost per unit= (78,000 - 50,000) / (12,000 - 5,000)

= $4

Therefore, the correct option is C $4.

Learn more about Variable cost here:

https://brainly.com/question/5965421