Supply costs at Coulthard Corporation's chain of gyms are listed below:
Client-Visits | Supply Cost | |||||||
March | 11,654 | $ | 28,435 | |||||
April | 11,450 | $ | 28,344 | |||||
May | 11,982 | $ | 28,583 | |||||
June | 12,700 | $ | 28,906 | |||||
July | 11,714 | $ | 28,462 | |||||
August | 11,200 | $ | 28,231 | |||||
September | 11,994 | $ | 28,588 | |||||
October | 11,685 | $ | 28,449 | |||||
November | 11,833 | $ | 28,516 | |||||
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 are closest to: (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
$2.14 per client-visit; $28,463 per month
$1.03 per client-visit; $16,133 per month
$0.49 per client-visit; $22,686 per month
$0.45 per client-visit; $23,191 per month
Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)
=(28,906-28,231)/(12700-11,200)
=$0.45 per client visit
Total fixed cost=28906-(0.45*12700)
=$23191 per month
Hence the correct option is:
$0.45 per client-visit; $23,191 per month
Supply costs at Coulthard Corporation's chain of gyms are listed below: Client-Visits Supply Cost March 11,654...
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