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 fixed portion of the water bill at the car wash?
A) $3,000
B) $5,000
C) $5,250
D) $1,500

Question

Quizplus · Accepted Answer

The fixed portion of the water bill is the cost that does not change regardless of the number of cars washed. To calculate the fixed portion, we can use the high-low method:Fixed cost = (High bill - Low bill) / (High activity - Low activity)= ($6,000 - $4,500) / (2,000 - 1,000)= $1,500 / 1,000= $1,500Therefore, the fixed portion of the water bill is $1,500.

Ricco Was Reviewing the Water Bill for His Carwash Business