Rooter\'s Cleaning Services provided data concerning the costs incurred to clean
ID: 2757576 • 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
Cost at highest level of activity 6,880.00 Cost at Lowest level of activity 4,100.00 Highest level of activity 300.00 Lowest Level of activity 150.00 Variable cost per unit = (6880-4100)/(300-150) Variable cost per unit = 2,780/150 Variable cost per unit = 18.53 Monthly Variable Costs = 18.53*no of rooms cleaned Note: In the above question data for estimated rooms cleaned is not given to compute monthly variable costs
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