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:
A) $1.85 per client-visit; $23,547 per month
B) $1.77 per client-visit; $557 per month
C) $0.55 per client-visit; $16,579 per month
D) $0.57 per client-visit; $16,273 per month

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:
A) $1.85 per client-visit; $23,547 per month 
B) $1.77 per client-visit; $557 per month 
C) $0.55 per client-visit; $16,579 per month 
D) $0.57 per client-visit; $16,273 per month

Quizplus · Accepted Answer

11ea7761_1883_6ab4_81a5_d94c61c1ca13_TB2580_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