Andy Hiking produces backpacks. In the previous year, its highest and lowest production levels occurred in July and January, respectively. In July, it produced 5,900 backpacks at a total cost of $207,250. In January, it produced 4,400 backpacks at a total cost of $97,000. Using the high/low method, the average variable cost per of producing a backpack was:

Variable cost= $73.50

Explanation:

The high low method is used to get the fixed and variable cost of a business activity given limited data. It involves taking the highest and lowest points, then comparing the total cost at these points.

We use the following formula

Variable cost= (Highest activity cost - Lowest activity cost)/ (Highest activity unit - Lowest activity unit)

Variable cost= (207,250- 97,000)/ (5,900-4,400)

Variable cost= 110,250/ 1,500

Variable cost= $73.50

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the business rule that governs the relationship is one-to-many as there are multiple customers for each agent.

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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