Question

Use the following information for Exercises 3-30 through 3-32: Luisa Crimini has been operating a beauty shop in a college town ecent, Luisa rented space next to her shop and opened a tanning salon. She anticipated costs for the tanning service would primarily be fixed but found that tanning salorn ith the number of appointments. Costs for this service over the past eight months are as follows: Tanning Appointments 1,600 2,000 3,500 2,500 1,500 2,300 2,150 3,000 Total Cost $1,754 2,140 2,790 2,400 1,790 2,275 2,200 2,640 Month January February March May June August BJECTIVE Exercise 3-30 High-Low Method Refer to the information for Luisa Crimini above. Required: 1. Which month represents the high point? The low point? Using the high-low method, compute the variable rate for tanning. Compute the fixed cost per month. 2. 3. Using your answers to Requirement 2, write the cost formula for tanning services. Calculate the total predicted cost of tanning services for September for 2,500 appointments using the formula found in Requi cost for September? How much is the total predicted variable cost for September? CONCEPTUAL CONNECTION Identify and briefly explain any additional issues Luisa might be wise to consider when using the high-low method to estimate the costs of her tanning salon. 4. rement 3. Of that total cost, how much is the total fixed 5.

Answer 1

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