Question

Kim Airedale, a manager of Waggers, Inc., was reviewing the water bills of a dog daycare and spa. She determined that its highest and lowest bills of $3600 and $2800 were incurred in the months of May and November, respectively. If 500 dogs were washed in May and 200 dogs were washed in November, what was the variable cost per dog associated with the company's water bill? (Round your answer to the nearest cent.) A. $7.20 B. $4.00 C. $14.00 D. $2.67

Answer 1

Answer:

D. $2.67

Explanation:

On the high-low method we compare the diference between the highest level and lowest level of activity.

highest 500 dogs 3,600 (fixed + variable cost)

less

lowest 200 dogs 2,800 (fixed + variable cost)

300 dogs    800 variable cost

800/300 = variable cost per dog = 2.6666667 = (2 + 2/3) variable cost of water bill

800 x (2 + 2/3) + fixed cost = 3,600

2133,3333 + fixed cost = 3600

fixed cost = 3,600 - 2,133.33 = 1,466.66667