The phone bill for an accounting firm consists of both fixed and variable costs.Refer to the four-month data below and apply the high-low method to answer the question.
$$\begin{array} { | l | l | l | }
\hline & \text { Minutes } & \text { Total Bill } \
\hline \text { Tanuary } & 470 & \$ 3300 \
\hline \text { February } & 210 & \$ 2690 \
\hline \text { March } & 170 & \$ 2630 \
\hline \text { April } & 320 & \$ 2880 \
\hline
\end{array}$$
If the company uses 390 minutes in May,how much will the total bill be?

Question

The phone bill for an accounting firm consists of both fixed and variable costs.Refer to the four-month data below and apply the high-low method to answer the question.
$$\begin{array} { | l | l | l | } 
\hline & \text { Minutes } & \text { Total Bill } \
\hline \text { Tanuary } & 470 & \$ 3300 \
\hline \text { February } & 210 & \$ 2690 \
\hline \text { March } & 170 & \$ 2630 \
\hline \text { April } & 320 & \$ 2880 \
\hline
\end{array}$$
If the company uses 390 minutes in May,how much will the total bill be?

Quizplus · Accepted Answer

Using the high-low method, we can determine the variable cost per unit (minute) and the fixed cost of the phone bill.

Highest month: March - 500 minutes, $3725.20 
Lowest month: January - 250 minutes, $2741.60

Variable cost per unit (minute):
= (highest cost - lowest cost) / (highest units - lowest units)
= ($3725.20 - $2741.60) / (500 minutes - 250 minutes)
= $0.99/minute

Fixed cost:
= highest cost - (variable cost per unit x highest units)
= $3725.20 - ($0.99/minute x 500 minutes)
= $3229.20

To find the total bill for using 390 minutes in May:
Total cost = fixed cost + variable cost per unit x units 
= $3229.20 + ($0.99/minute x 390 minutes)
= $3121.60

Therefore, the answer is option C, $3121.60.

The Phone Bill for an Accounting Firm Consists of Both