Supply costs at Coulthard Corporation's chain of gyms are listed below: Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Those estimates are closest to: (Round your intermediate calculations to 2 decimal places.)

Question

Supply costs at Coulthard Corporation's chain of gyms are listed below:  Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Those estimates are closest to: (Round your intermediate calculations to 2 decimal places.)

Quizplus · Accepted Answer

11eacbfc_c8a8_e433_8ffe_a7a944caef9e_TB7552_00 Variable cost per unit = Change in cost ÷ Change in activity
= $464 ÷ 821 client-visits
= $0.57 per client-visit
Fixed cost = Total cost - Variable cost element
= $23,742 - ($0.57 per client-visit × 13,104 client-visits)
= $23,742 - $7,469
= $16,273

Supply Costs at Coulthard Corporation's Chain of Gyms Are Listed