Pelicans Ice is a snow cone stand near the local park. To plan for the future, it wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served.Number of snow conesTotal operating costs\$5,980\$6.400\$5,000\$6,330\$8,000\$6,575MonthJanuaryFebruary6,4007,0004,0006,9009,0007,250MarchAprilMayJuneUsing the high - low method, the monthly operating costs if Pelicans sells 8,000 snow cones in a month areO A. \$17,000о В. \$4,800O C. \$7,400O D. \$2,600

Question
35 views
check_circle

Step 1

Cost incurred to produce and sell a product consist of 2 components, variable cost, and fixed cost.

Variable cost is the cost that changes with the change in production levels. It is directly proportional to the units produced.

Fixed cost is the other indirect cost incurred by the business. These are fixed in nature and do not change with the change in production level.

The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level.

Step 2

Computation of Cost

In the given question:

Highest number of Snow Cones = 9,000

Total Operating Cost  = \$8,000

Lowest number of Snow Cones = 4,000

Total Operating Cost = \$5,000

Step 3

Total Operating Cost in case...

Want to see the full answer?

See Solution

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in