ETutor is an online tutoring service provider that is particularly popular with college students.The company is interested in estimating the fixed and variable components of its tutoring services costs.The manager believes that these costs are driven by the number of hours of tutoring services provided.The following information was gathered for the last six months of business:
$$\begin{array} { l c r }
\text { Month } & \text { Number of Hours } & \text { Tutoring costs } \
\text { January } & 25,000 & \$ 308,000 \
\text { February } & 41,000 & 420,000 \
\text { March } & 29,000 & 352,000 \
\text { April } & 31,000 & 373,000 \
\text { May } & 34,000 & 378,000 \
\text { June } & 18,000 & 252,000
\end{array}$$ Required:
1)Compute the average tutoring cost per hour for the six-month period.(Round the average tutoring cost per hour to two decimal points.)
2)Use the high-low method to estimate the total fixed cost and the variable cost per hour.(Round the variable cost per hour to two decimal points.)
3)Name one advantage and one disadvantage of the high-low method.
4)Describe the scattergraph method that can be used to analyze mixed costs.

Question

ETutor is an online tutoring service provider that is particularly popular with college students.The company is interested in estimating the fixed and variable components of its tutoring services costs.The manager believes that these costs are driven by the number of hours of tutoring services provided.The following information was gathered for the last six months of business:
 $$\begin{array} { l c r } 
\text { Month } & \text { Number of Hours } & \text { Tutoring costs } \
\text { January } & 25,000 & \$ 308,000 \
\text { February } & 41,000 & 420,000 \
\text { March } & 29,000 & 352,000 \
\text { April } & 31,000 & 373,000 \
\text { May } & 34,000 & 378,000 \
\text { June } & 18,000 & 252,000
\end{array}$$ Required:
1)Compute the average tutoring cost per hour for the six-month period.(Round the average tutoring cost per hour to two decimal points.)
2)Use the high-low method to estimate the total fixed cost and the variable cost per hour.(Round the variable cost per hour to two decimal points.)
3)Name one advantage and one disadvantage of the high-low method.
4)Describe the scattergraph method that can be used to analyze mixed costs.

Quizplus · Accepted Answer

The Answer of ETutor is an online tutoring service provider that is particularly popular with college students.The company is interested in estimating the fixed and variable components of its tutoring services costs.The manager believes that these costs are driven by the number of hours of tutoring services provided.The following information was gathered for the last six months of business:
 $$\begin{array} { l c r } 
\text { Month } & \text { Number of Hours } & \text { Tutoring costs } \
\text { January } & 25,000 & \$ 308,000 \
\text { February } & 41,000 & 420,000 \
\text { March } & 29,000 & 352,000 \
\text { April } & 31,000 & 373,000 \
\text { May } & 34,000 & 378,000 \
\text { June } & 18,000 & 252,000
\end{array}$$ Required:
1)Compute the average tutoring cost per hour for the six-month period.(Round the average tutoring cost per hour to two decimal points.)
2)Use the high-low method to estimate the total fixed cost and the variable cost per hour.(Round the variable cost per hour to two decimal points.)
3)Name one advantage and one disadvantage of the high-low method.
4)Describe the scattergraph method that can be used to analyze mixed costs.

ETutor Is an Online Tutoring Service Provider That Is Particularly