Question

The phone bill for a corporation consists of both fixed and variable costs. Refer to the fourminusmonth data below and apply the highminuslow method to answer the question. Minutes Total Bill January 470 $ 4 comma 500 February 200 $ 2 comma 695 March 180 $ 2 comma 650 April 320 $ 2 comma 830 If the company uses 390 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

Total cost= $3,989.65

Step-by-step explanation:

Giving the following information:

Minutes Total Bill

January 470 $4,500

February 200 $2,695

March 180 $2,650

April 320 $2,830

First, we need to calculate the unitary variable cost and fixed costs:

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

Variable cost per unit= (4,500 - 2,650) / (470 - 180)

Variable cost per unit= $6.37931

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 4,500 - (6.37931*470)

Fixed costs= $1,501.72

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 2,650 - (6.37931*180)

Fixed costs= $1,501.72

If the company uses 390 minutes in​ May:

Total cost= 1,501.72 + 6.37931*390

Total cost= $3,989.65