Thomas Train has collected the following information over the last six months. Using the high-low method, what is the variable cost per unit? Your Answer: Please show workings... thanks Solution The variable cost per unit can be calculated with the use of total cost for the highest and lowest volume of activity during the past six months. The formula for calculating the variable cost per unit can be derived as follows: Variable Cost Per Unit = (Total Cost at the Highest Units Produced - Total Cost at the Lowest Units Produced)/(Highest Units Produced - Lowest Units Produced) ____________ Here, Total Cost at the Highest Units Produced = $29,200, Total Cost at the Lowest Units Produced = $25,600, Highest Units Produced = 19,400 units and Lowest Units Produced = 10,000 units Variable Cost Per Unit = (29,200 - 25,600)/(19,400 - 10,000) = .383 or .38 per unit (answer) .