Ricco was reviewing the water bill for his carwash business and determined that the highest bill, $6,000, occurred in July when 2,000 cars were washed. The lowest bill, $4,500, occurred in February when 1,000 cars were washed. Use the high-low method to answer the following questions.
-What was the variable cost per carwash?
A) $3.00
B) $1.50
C) $0.67
D) $4.50

Question

Quizplus · Accepted Answer

The high-low method formula for determining variable cost is:

Variable cost per unit = (Highest total cost – Lowest total cost) / (Highest number of units – Lowest number of units)

Using the data provided:
- Highest total cost = $6,000
- Lowest total cost = $4,500
- Highest number of units = 2,000
- Lowest number of units = 1,000

Plugging in these values:
Variable cost per unit = ($6,000 - $4,500) / (2,000 - 1,000)
Variable cost per unit = $1,500 / 1,000
Variable cost per unit = $1.50

Therefore, the variable cost per carwash is $1.50.

As for the best choice, it depends on what the question is asking for. If the question is asking for the variable cost per carwash, then the answer is (B) $1.50. If the question is asking for something else, such as the total cost of washing a certain number of cars, then a different choice may be correct.

Ricco Was Reviewing the Water Bill for His Carwash Business