Question

Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the following for the past nine months:Number of CavitiesMonth Filled Total CostJanuary 475 $5,750February 575 6,250March 350 5,200April 675 6,500May 500 5,650June 400 5,250July 625 6,300August 650 6,000September 450 5,450Use the high-low method to estimate total fixed cost and variable cost per cavity filled. Round your answers to 2 decimal places.Fixed Cost _____Variable Cost per Unit _____Using these estimates, calculate Mountain's total cost for filling 550 cavities.Estimated Total Cost _____

Answer 1

Answer:

The fixed cost, variable cost per unit and the total cost is $3,800, $4 per unit ,and $6,000 respectively

Explanation:

1. The computation of the variable cost per unit is shown below:

= (High total cost -  low total cost) ÷ (High number of cavities - low number of cavities)

= ($6,500 - $5,200) ÷ (675 - 350)

= $1,300 ÷ 325

= $4

2. The computation of the fixed cost is shown below:

Fixed cost  = total cost -  Variable cost

                  = $6,500 - (675 × $4)

                  =  $6,500 - $2,700

                  = $3,800

3. And, the total cost for 550 cavities would be equal to

= Fixed cost + variable cost

= $3,800 + (550 cavities × $4)

=  $3,800 + $2,200)

=  $6,000