Determining mixed costs—the high-low method The manager of Trusty Car inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,300 for 1,300 inspections to $3,900 for 900 inspections. Requirements Use the high—low method to calculate the variable cost per inspection. Calculate the total fixed costs. Write the equation and calculate the operating costs for 1,000 inspections. Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 900, 1,000, and 1,300 inspections.
Determining mixed costs—the high-low method The manager of Trusty Car inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,300 for 1,300 inspections to $3,900 for 900 inspections. Requirements Use the high—low method to calculate the variable cost per inspection. Calculate the total fixed costs. Write the equation and calculate the operating costs for 1,000 inspections. Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 900, 1,000, and 1,300 inspections.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 19BEA: Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period That...
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Determining mixed costs—the high-low method
The manager of Trusty Car inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,300 for 1,300 inspections to $3,900 for 900 inspections.
Requirements
- Use the high—low method to calculate the variable cost per inspection.
- Calculate the total fixed costs.
- Write the equation and calculate the operating costs for 1,000 inspections.
- Draw a graph illustrating the total cost under this plan. Label the axes, and show the costs at 900, 1,000, and 1,300 inspections.
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