Question

Pablo was reviewing the water bill for his carwash business and determined that the highest​ bill, $5,400, occurred in July when​ 2,700 cars were washed and the lowest​ bill, $3,100, occurred in February when​ 1,500 cars were washed. What was the variable cost per​ carwash?

Answer 1

Variable cost per unit= $1.92 per car wash

Step-by-step explanation:

Giving the following information:

$5,400, occurred in July when​ 2,700 cars were washed and the lowest​ bill, $3,100, occurred in February when​ 1,500 cars were washed.

To determine the variable cost, we need to use the high-low method:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (5,400 - 3,100) / (2,700 - 1,500)= $1.92 per car wash