a. Calculate the hotel's phone bills for January and February.
January
Total Cost = Fixed Cost + Variable Cost
Total Cost = $200 + $0.30 x calls
Total Cost = $200 + $0.30 x 10,000
Total Cost = $200 + $3,000
Total Cost = $3,200
February
Total Cost = Fixed Cost + Variable Cost
Total Cost = $200 + $0.30 x calls
Total Cost = $200 + $0.30 x 8,000
Total Cost = $200 + $2,400
Total Cost = $2,600
b. Calculate the cost per phone call in January and in February.
January
Cost per Call = Total Cost / Total Calls
Cost per Call = $3,200 / 10,000 calls
Cost per Call = $0.32 per call
February
Cost per Call = Total Cost / Total Calls
Cost per Call = $2,600 / 8,000 calls
Cost per Call = $0.325 per call
c. Separate the January phone bill into its fixed and variable components.
January
The fixed component is equal to $200 regardless of the total number of calls. The variable cost, therefore, is equal to the remaining $3,000 ($3,200 total - $200 fixed).
February
The fixed component is equal to $200 regardless of the total number of calls. The variable cost, therefore, is equal to the remaining $2,400 ($2,600 total - $200 fixed).
