Question

Sherri's Tan-O-Rama is a local tanning salon. The following information reflects its number of appointments and total costs for the first half of the year:

Month	Number of Appointments		Total Cost
January	500	$	6,800
February	300		5,000
March	275		5,450
April	475		6,050
May	200		5,600
June	250		5,000

Using the high-low method, calculate the total fixed cost per month and the variable cost per tanning appointment. (Round your "Variable Cost per Unit" answer to 2 decimal places and "Fixed Cost" answer to the nearest dollar amount.)

Handy’s Hats makes the world’s best hats. Information for the last eight months follows:

Month	Number of Hats Produced	Total Cost
January	6,750	11,300
February	5,540	10,200
March	6,250	10,900
April	3,500	7,100
May	8,500	12,100
June	3,950	8,200
July	3,900	8,100
August	4,690	9,350

Suppose that Handy’s expects to sell 5,300 hats during the month of September and that each hat sells for $2.75.

Handy performed a least-squares regression and obtained the following results:

	Coefficients
Intercept	4,321.12
X Variable 1	0.99

Prepare Handy’s contribution margin income statement for the month of September. (Round your answers to 2 decimal places.)

Answer 1

Estimate the costs with High-Low Method Month Appointments Total Cost High level of Activity January 500 6800 low level of Activity |May 200 5600 Difference 300 1200 Answers Varaible cost Per unit (1200/300) 4.00 Per unit Fixed Cost (6800-(500*4)) 4800 Per month

Contibution Margin income statement 5300 PerUnit Sales 14575.00 2.751 VariableCost 5247.00 0.99 Contibution Margin 9328.00 1.76 Fixedcost 4321.12 operating income 5006.88