The phone bill for a company consists of both fixed and variable costs. Refer to the four-month data below and apply the high-low method to answer the question.
-$$\begin{array} { | l | r | r | }
\hline & \text { Minutes } & \text { Total Bill } \
\hline \text { January } & 480 & \$ 4500 \
\hline \text { February } & 240 & \$ 2690 \
\hline \text { March } & 160 & \$ 2630 \
\hline \text { April } & 300 & \$ 2845 \
\hline
\end{array}$$ If the company uses 360 minutes in May, how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Question

The phone bill for a company consists of both fixed and variable costs. Refer to the four-month data below and apply the high-low method to answer the question. 
-$$\begin{array} { | l | r | r | } 
\hline & \text { Minutes } & \text { Total Bill } \
\hline \text { January } & 480 & \$ 4500 \
\hline \text { February } & 240 & \$ 2690 \
\hline \text { March } & 160 & \$ 2630 \
\hline \text { April } & 300 & \$ 2845 \
\hline
\end{array}$$ If the company uses 360 minutes in May, how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Quizplus · Accepted Answer

First, identify the highest and lowest activity levels to calculate the variable cost per unit. The highest activity level is in January (480 minutes) with a total bill of $4500, and the lowest is in March (160 minutes) with a total bill of $2630. The variable cost per minute is calculated as: $$ \frac{\$4500 - \$2630}{480 - 160} = \frac{\$1870}{320} = \$5.84 \text{ per minute}.$$ Next, calculate the fixed cost by subtracting the total variable cost at either activity level from the total cost. Using the highest activity level: $$ \text{Fixed Cost} = \$4500 - (480 \times \$5.84) = \$4500 - \$2803.20 = \$1696.80. $$ For 360 minutes in May, the total bill will be: $$ \text{Fixed Cost} + (\text{Variable Cost per Minute} \times \text{Minutes}) = \$1696.80 + (360 \times \$5.84) = \$1696.80 + \$2102.40 = \$3799.20. $$ Rounding to the nearest dollar gives $3799.

The Phone Bill for a Company Consists of Both Fixed