Answer:
Cost= $6,242.18
Explanation:
Giving the following information:
Month Number of snow cones Total operating costs
January 3,500 cones $5,000
February 3,800 cones $4,800
March 5,000 cones $6,800
April 3,600 cones $5,450
May 4,700 cones $6,200
June 4,250 cones $5,950
Suzy uses the high-low method to determine her operating cost equation.
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ highest activity units - Lowest activity units)
Variable cost per unit= (6,800 - 4,800) / (5000 - 3,500)= 1.3333
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 6,800 - (1.3333*5000)= 133
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 4800 - (1.3333*3,500)= 133
Q= 4,582
Cost= 133 + 4582*1.3333= $6,242.18
