The phone bill for a CPA firm is a mixed cost. Please refer to the 4-month data below, apply the high-low method, and answer the question.
$$\begin{array} { | l | r | r | }
\hline & { \text { Minutes } } & \text { Total Bill } \
\hline \text { Jan } & 300 & \$ 2,650 \
\hline \text { Feb } & 150 & \$ 2,575 \
\hline \text { Mar } & 100 & \$ 2,550 \
\hline \text { Apr } & 250 & \$ 2,625 \
\hline
\end{array}$$
-
How much is the fixed portion of the total cost?

Question

The phone bill for a CPA firm is a mixed cost. Please refer to the 4-month data below, apply the high-low method, and answer the question.
$$\begin{array} { | l | r | r | } 
\hline &  { \text { Minutes } } & \text { Total Bill } \
\hline \text { Jan } & 300 & \$ 2,650 \
\hline \text { Feb } & 150 & \$ 2,575 \
\hline \text { Mar } & 100 & \$ 2,550 \
\hline \text { Apr } & 250 & \$ 2,625 \
\hline
\end{array}$$
-
How much is the fixed portion of the total cost?

Quizplus · Accepted Answer

The fixed cost is calculated using the high-low method: Variable cost per minute = (2650 - 2550) / (300 - 100) = $1. Fixed cost = Total cost - (Variable cost per minute * Minutes) = 2550 - (1 * 100) = $2,500.

The Phone Bill for a CPA Firm Is a Mixed