Gabel Industries Has Collected the Following Data in Order to Analyze

Essay

Gabel Industries has collected the following data in order to analyze the behavior of their costs: $\begin{array}{|c|c|c|}\hline \text { Month } & \text { Units Produced } & \text { Total Cost } \\\hline \text { January } & 8,750 & \$ 40,500 \\\hline \text { February } & 13.750 & \$ 41,500 \\\hline \text { March } & 12,500 & \$ 45,000 \\\hline \text { April } & 17,500 & \$ 41,500 \\\hline \text { May } & 23,750 & \$ 45,500 \\\hline \text { June } & 11,500 & \$ 38,500 \\\hline\end{array}$
(a) Using the high-low method, calculate the variable cost per unit and the estimated fixed costs.
(b) Using the resulting relationship, predict the costs if they produce 18,500 units in a future period.