Lowden company low and high level of activity last year was 40,000 units produced in june and 120,000 units produced in november. utility costs were $60,000 in june and $156,000 in november. using the high-low method, estimated total utility cost for a month in which 80,000 units will be produced is not determinable with the information given. $120,000. $108,000. $104,001.

Option (B) is correct.

Explanation:

Given that,

High level of activity = 120,000 units

Low level of activity = 40,000 units

Utility costs = $60,000 in June  

Utility costs = $156,000 in November

Variable cost per unit:

=

=  

= $1.2 per unit

Fixed cost element:

= Total cost at high level - variable cost at high level

= $156,000 - $1.20 x 120,000 units

= $156,000 - $144,000

= $12,000

Utility cost for a month:

=  Fixed cost per month + $1.20 variable cost per unit at 80,000 units

= $12,000 + $1.20 x 80,000 units

= $108,000

a

explanation:

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reducing the scale of the market for a new product.