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Gabel Industries has collected the following data in order to analyze the behavior of their costs: Jan: 8750 units, 40500 total cost. Feb: 13750 units, 41500 total. March: 12500 units, 45000 total. April: 17500 units, 41500 total. May: 23750 units, 45500 total. June: 11500 units, 38500 total.
A. Using the high-low method, calculate the variable cost per unit and estimated fixed costs.
B. Using the resulting relationship, predict the costs if they produce 18,500 units in a future period.
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