Jones Ice Cream Stand is operated by Mr.Jones and experiences different sales patterns throughout the year.To plan for the future,Mr.Jones wants to determine its cost behavior patterns.He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served.

Using the high-low method,the monthly operating costs-if Mr.Jones sells 1,436 ice cream cones in a month-are

Question

Jones Ice Cream Stand is operated by Mr.Jones and experiences different sales patterns throughout the year.To plan for the future,Mr.Jones wants to determine its cost behavior patterns.He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served.

Using the high-low method,the monthly operating costs-if Mr.Jones sells 1,436 ice cream cones in a month-are

Quizplus · Accepted Answer

C)
Highest cost $1,250 Highest activity 2,000
Lowest cost $950 Lowest activity 800
Difference $300 1,200
NOW divide the difference in the cost by the difference in the activity equals Variable cost per unit.$300/1,200 = $ .25
Put the numbers into the Cost Equation: $1,250 = $ .25 (2000)+ f
$750 = f
Finish the equation: y = $ .25 (1,436)+ 750
y = $1,109

Jones Ice Cream Stand Is Operated by Mr