Rooter\'s Cleaning Services provided data concerning the costs incurred to clean
ID: 2757564 • Letter: R
Question
Rooter's Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay $150 per night. Data for the past 7 months are as follows:
January
February
March
April
May
June
July
Number of rooms cleaned
250
160
200
150
300
170
260
Cleaning cost
$6,450
$4,060
$5,100
$4,100
$6,880
$4,200
$6,530
How much are estimated monthly variable costs using the high-low method?
January
February
March
April
May
June
July
Number of rooms cleaned
250
160
200
150
300
170
260
Cleaning cost
$6,450
$4,060
$5,100
$4,100
$6,880
$4,200
$6,530
Explanation / Answer
Variable cost per unit:
= (Highest total costs-Lowest total costs)÷Difference between activity
= ($6,880-$4,060)÷(300-160)
= $20.14 per room cleaned
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