Question

Ch3 HW Show Me How Luisa Crimini has been operating a beauty shop in a college town for the past 10 years. Recently, Luisa rented space next to her shop and opened a taneing salon. She anticipated that the costs for the tanning service would primarily be fioed, but found that tanning salion costs increased with the number of appointments. Costs for this service over the past 8 months are as Tanning Appointments Total Cost $1,742 3,100 $2.750 $2s00 $1,800 1,500 2.400 2.130 $2.100 1. Which month represents the high point? The low point Previous Check My Work

Answer 1

1. high point = March

Low point = January

2.Using high low method,

Variable rate per appointment = Difference in costs/difference in appointments

= (2,750-1,742)/(3,100-700)

= $0.42 per tanning appointment

Fixed cost = Total cost - Variable Cost

= $1,742 - 700*0.42

=$1,448

3. Cost formula = $1,448+$0.42*Number of appointments

4.Number of appointments in September = 2,500

Total Cost = $1,448+0.42*2,500

=$2,498

Fixed cost= $1,448

Variable =$ 1,050