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OlgaM077 [116]
3 years ago
11

Pelicans Ice is a snow cone stand near the local park. To plan for the​ future, Pelicans Ice wants to determine its cost behavio

r patterns. It has the following information available about its operating costs and the number of snow cones served. Month Number of snow cones Total operating costs January ​6,400 ​$5,980 February ​7,000 ​$6,400 March ​4,000 ​$5,000 April ​6,900 ​$6,330 May ​9,000 ​$8,000 June ​7,250 ​$6,575 Using the highminuslow ​method, the fixed costs for a month are
Business
1 answer:
zlopas [31]3 years ago
4 0

Answer:

Fixed costs= $2,600

Explanation:

Giving the following information:

January ​6,400 ​$5,980

February ​7,000 ​$6,400

March ​4,000 ​$5,000

April ​6,900 ​$6,330

May ​9,000 ​$8,000

June ​7,250 ​$6,575

<u>To calculate the fixed costs under the high-low method, we need to use the following formulas:</u>

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (8,000 - 5,000) / (9,000 - 4,000)

Variable cost per unit= $0.6 per unit

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 8,000 - (0.6*9,000)

Fixed costs= $2,600

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 5,000 - (0.6*4,000)

Fixed costs= $2,600

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