Sherris Tan-o-Rama is a local tanning salon. The following information reflects

Question

Sherris Tan-o-Rama is a local tanning salon. The following information reflects its number of appointments and total costs for the first half of the year: Number of Month Appointments Total Cost January 250 $5,000 February 300 6,000 March 500 6,200 April 5,300 May 150 5,450 June 175 5,230 Using the high-low method, calculate the total fixed cost per month and the variable cost per tanning appointment (Round your "variable cost per Unit" answer to 2 decimal places and "Fixed Cost answer to the nearest dollar amount.) Variable Cost per Unit Fixed Cost

Explanation / Answer

Variable cost per unit = (6200 - 5450)/(500 - 150)

= 2.14 per unit

Fixed cost = 6200 - 500 x 2.14

= 5130

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