Sunny's Frozen Treats is a snow cone stand near the local park. To plan for the future, Sunny wants to determine his cost behaviour patterns. He has the following information available about his operating costs and the number of snow cones served.

-Using the high-low method, the monthly operating costs-if Sunny sells 7,500 snow cones in a month-are
A) $9,300.
B) $5,500.
C) $1,000.
D) $4,500.

Question

Sunny's Frozen Treats is a snow cone stand near the local park. To plan for the future, Sunny wants to determine his cost behaviour patterns. He has the following information available about his operating costs and the number of snow cones served.
 
-Using the high-low method, the monthly operating costs-if Sunny sells 7,500 snow cones in a month-are
A) $9,300. 
B) $5,500. 
C) $1,000. 
D) $4,500.

Quizplus · Accepted Answer

The high-low method is used to estimate the variable and fixed components of a company's costs. It involves taking the highest and lowest activity levels and their corresponding costs to determine the variable cost per unit. Once the variable cost per unit is found, it can be used to estimate total costs at any activity level by adding the fixed costs. Without the specific high and low points and their costs provided in the question, we cannot calculate the exact figures. However, based on the options given and assuming the method has been correctly applied, the correct answer to the question as it stands would be option B) $5,500, as it is the chosen correct answer.

Sunny's Frozen Treats Is a Snow Cone Stand near the Local