Shernis Tan-O-Rama is a local tanning salon. The following information refects i

Question

Shernis Tan-O-Rama is a local tanning salon. The following information refects its number of appointments and total costs for the first half of the year Number of March Aprl May June 275 250 475 225 200 150 6,550 6,400 7,000 5,700 5,300 5,700 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 = (Total cost of high activity – Total cost low activity) / (Highest activity unit – Lowest activity unit)

= (7000-5700)/(475-150)

=$4 per appointment

hence, fixed cost = 7000 - 475*4 = $5,100

Looking forward to your feedback

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