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Supply costs at Lattea Corporation's chain of gyms are listed below: Client-Visits Supply Cost   March 11,654...

Supply costs at Lattea Corporation's chain of gyms are listed below:

Client-Visits Supply Cost
  March 11,654      $28,568     
  April 11,450      $28,402     
  May 11,982      $28,826     
  June 12,700      $28,906     
  July 11,714      $28,629     
  August 11,200      $28,228     
  September 11,994      $28,827     
  October 11,685      $28,585     
  November 11,833      $28,710     

Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-low method to estimate the variable and fixed components of this cost, Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Those estimates would be closest to: (Round your Variable cost per unit to 2 decimal places.)

$2.14 per client-visit; $28,630 per month

$1.03 per client-visit; $16,133 per month

$0.45 per client-visit; $23,191 per month

$0.49 per client-visit; $22,686 per month

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Answer #1

Answer : $0.45 Per ClientVisit : $23,191 Per month

Estimate the cost formula for Supply cost Month Client-Visits june August Supply Cost High level of Activity low level of Activity Change 12700 11200 1500 28906 28228 678 Varaible Cost ( 678/1500) Fixed Cost (28906-(12700 0.45)) 0.45 Per DLH 23191 Varaible Cost-Change in cost/Change in Visits 678/1500 0.45 Fixed Cost- Total cost - (Visits * Varaible cost) 28906-(12700 0.45): 23191

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