Question

Kim​ Airedale, a manager of​ Waggers, Inc., was reviewing the water bills of a dog daycare and spa. She determined that its highest and lowest bills of​ $3,600 and​ $2,800 were incurred in the months of May and​ November, respectively. If 500 dogs were washed in May and 200 dogs were washed in​ November, what was the variable cost per dog associated with the​ company's water​ bill? (Round your answer to the nearest​ cent.)

Answer 1

variable cost is $2.67

Step-by-step explanation:

The variable cost per dog associated with company's water bill can be computed using the high-low method given below'

variable cost=water bills at the highest activity level-water bills at the lowest activity level/(number of dogs at the highest activity level-number of dogs at the lowest activity level)

water bills at the highest activity level is $3,600

water bills at the lowest activity level is $2800

number of dogs at the highest activity level is 500 dogs

number of dogs at the lowest activity level 200 dogs

variable cost =($3,600-$2800)/(500-200)

variable cost is $2.67

Answer 2

The variable cost is $2.67 per dog.

Step-by-step explanation:

The variable cost per unit can be determine by using the highlow method to separate the variable component of the given mixed cost. the variable cost is the one that varies with the level of output. Under high low method, we calculate the variable cost per unit by using the following formula:

Variable cost per unit = (Cost at highest activity level - cost at lowest activity level) / (Highest activity level in units - lowest activity level in units)

Variable cost per unit = (3600 - 2800) / (500 - 200)

Variable cost per unit = $2.67 per dog