Question

The phone bill for a corporation consists of both fixed and variable costs. Refer to the​ four-month data below and apply the​ high-low method to answer the question. Minutes Total Bill January 480 ​$4,500 February 240 ​$2,690 March 160 ​$2,630 April 300 ​$2,845 If the company uses 360 minutes in​ May, how much will the total bill​ be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest​ dollar.)

Answer 1

$3,799

Step-by-step explanation:

The total bill amount is

Before that The computation of the fixed cost and the variable cost per minute by using high low method is computed

Variable cost per minute = (High bill cost - low bill cost) ÷ (High minutes - low minutes)

= ($4,500 - $2,630) ÷ (480 - 160)

= $1,870 ÷ 320

= $5.84

Now the fixed cost equal to

= High bill cost - (High minutes × Variable cost per minute)

= $4,500 - (480 × $5.84)

= $4,500 - $2,803

= $1,697

Now the total bill would be

= Fixed cost + expected minutes × variable cost per minutes

= $1,697 + 360 × $5.84

= $1,697 + $2,102

= $3,799