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Question:
(a) The following output levels and production costs have been recorded over the last three periods:
Required:
Using the high-low method, estimate the: (i) variable costs per unit;(ii) total fixed costs per period;(iii) total costs that would be incurred in a period at an output of 8,500 units.
(b) A company is launching a new product. The variable cost of the product is $4.50 per unit and fixed costs total $21,000 per period. The initial selling price is to be set by adding a mark-up of 10% to total unit cost based on estimated sales of 6,000 units per period. The company does not hold any inventory.
Required: Calculate the initial selling price of the product.
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