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: $$\begin{array} { | l | c | c | c | c | c | c | c | }
\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } & \text { June } & \text { July } \
\hline \begin{array} { l }
\text { Number of lawns } \
\text { mowed }
\end{array} & 200 & 110 & 150 & 100 & 220 & 120 & 210 \
\hline \text { Mowing cost } & \$ 12,900 & \$ 8,120 & \$ 10,200 & \$ 8,200 & \$ 13,060 & \$ 8,400 & \$ 13,280 \
\hline
\end{array}$$ How much are the estimated monthly fixed costs 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: $$\begin{array} { | l | c | c | c | c | c | c | c | } 
\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } & \text { June } & \text { July } \
\hline \begin{array} { l } 
\text { Number of lawns } \
\text { mowed }
\end{array} & 200 & 110 & 150 & 100 & 220 & 120 & 210 \
\hline \text { Mowing cost } & \$ 12,900 & \$ 8,120 & \$ 10,200 & \$ 8,200 & \$ 13,060 & \$ 8,400 & \$ 13,280 \
\hline
\end{array}$$ How much are the estimated monthly fixed costs using the high-low method?

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate fixed and 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 ($13,060 - $8,200) / (220 - 100) = $40.50. The fixed cost is then calculated using either the high or low point: $13,060 - (220 * $40.50) = $4,150.

Lawn Cut Perfection Provided Data Concerning the Costs Incurred to Mow