Chapter 6 omework: MGR core: 0 of 1 pt 6-31A (book/static) Save 6 of 9 (8 comple

Question

Chapter 6 omework: MGR core: 0 of 1 pt 6-31A (book/static) Save 6 of 9 (8 complete) ? Hw Score: 64.52%, 5.81 of 9 pts Question Help The manager of the main laboratory facility at CenterHealth Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed but that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year. ElB (Click the ioon to view the data.) Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 2,800 lab tests are performed next month. Let's begin by determining the formula that is used to calculate the variable cost (slope) Variable coat (lope) hoose from any drop-down list and then click Check Answer Clear All Check Answer remaining

Explanation / Answer

Highest Number of lab test performed = 4,600
Highest lab overhead costs = $31,100

Lowest Number of lab test performed = 2,000
Lowest lab overhead costs = $22,000

Variable Cost per lab test = (Highest lab overhead costs - Lowest lab overhead costs) / (Highest Number of lab test performed - Lowest Number of lab test performed)
Variable Cost per lab test = ($31,100 - $22,000) / (4,600 - 2,000)
Variable Cost per lab test = $3.50

Fixed Cost = Highest lab overhead costs - Variable Cost per lab test * Highest Number of lab test performed
Fixed Cost = $31,100 - $3.50 * 4,600
Fixed Cost = $15,000

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