Tasty Treats is a snow cone stand near the local park.To plan for the future,it wants to determine its cost behavior patterns.It has the following information available about its operating costs and the number of snow cones served.

Using the high-low method,the monthly operating costs-if Sunny sells 8,000 snow cones in a month-are

Question

Tasty Treats is a snow cone stand near the local park.To plan for the future,it wants to determine its cost behavior patterns.It has the following information available about its operating costs and the number of snow cones served.

Using the high-low method,the monthly operating costs-if Sunny sells 8,000 snow cones in a month-are

Quizplus · Accepted Answer

A)
Highest cost $6,820 Highest activity 7,600
Lowest cost $5,840 Lowest activity 6,200
Difference $980 1,400
NOW divide the difference in the cost by the difference in the activity equals Variable cost per unit.$980/1,400 = $ .70
Put the numbers into the Cost Equation: $6,820 = $ .70 (7,600)+ f
$1,500 = f
Finish the equation: y = $ .70 (8,000)+ 1,500
y = $7,100

Tasty Treats Is a Snow Cone Stand near the Local