Lawn Cut Perfection provided data concerning the costs incurred to mow residential lawns for which customers pay $45 per mowing. Data for the past 7 months are as follows:
$$\begin{array} { | l | c | c | c | c | c | c | c | }
\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } & \text { June } & \text { July } \
\hline \text { Number of lawns mowed } & 200 & 110 & 150 & 100 & 220 & 120 & 210 \
\hline \text { Mowing cost } & \$ 12,900 & \$ 8,120 & \$ 10,200 & \$ 8,200 & \$ 13,060 & \$ 8,400 & \$ 13,280 \
\hline
\end{array}$$
How much is the estimated variable cost of mowing one lawn using the high-low method?

Question

Lawn Cut Perfection provided data concerning the costs incurred to mow residential lawns for which customers pay $45 per mowing. Data for the past 7 months are as follows:
$$\begin{array} { | l | c | c | c | c | c | c | c | } 
\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } & \text { June } & \text { July } \
\hline \text { Number of lawns mowed } & 200 & 110 & 150 & 100 & 220 & 120 & 210 \
\hline \text { Mowing cost } & \$ 12,900 & \$ 8,120 & \$ 10,200 & \$ 8,200 & \$ 13,060 & \$ 8,400 & \$ 13,280 \
\hline
\end{array}$$
How much is the estimated variable cost of mowing one lawn using the high-low method?

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate variable costs. The highest number of lawns mowed is 220 (May) with a cost of $13,060, and the lowest is 100 (April) with a cost of $8,200. The variable cost per lawn is calculated as: (Cost difference) / (Activity difference) = ($13,060 - $8,200) / (220 - 100) = $4,860 / 120 = $40.50.

Lawn Cut Perfection Provided Data Concerning the Costs Incurred to Mow