Supply costs at Rupard Corporation's chain of gyms are listed below: Management believes that supply cost is a mixed cost that depends on client-visits.Using the high-low method to estimate the variable and fixed components of this cost,those estimates would be closest to:

Question

Supply costs at Rupard Corporation's chain of gyms are listed below:  Management believes that supply cost is a mixed cost that depends on client-visits.Using the high-low method to estimate the variable and fixed components of this cost,those estimates would be closest to:

Quizplus · Accepted Answer

Variable cost = Change in cost F1F1F1S1F1F1F10 Change in activity
= ($28,707 - $28,093) F1F1F1S1F1F1F10 (13,968 - 13,166) = $0.77
Fixed cost element = Total cost - Variable cost element
= $28,707 - ($0.77 F1F1F1S1F1F1F10 13,968) = $17,952
Therefore,the cost formula for total supply cost is $17,952 per period plus $0.77 per client-visit,or Y = $17,952 + $0.77X

Supply Costs at Rupard Corporation's Chain of Gyms Are Listed