Question

The phone bill for a corporation consists of both fixed and variable costs. Refer to the fourmonth data below and apply the highlow method to answer the question.

Min. Total Bill
January 460 $4,000
February 240 $2,675
March 180 $2,655
April 310 $5,730
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.)
A) $1,842
B) $1,829
C) $3,672
D) $6,157

Answer 1

$3,601

Step-by-step explanation:

The calculation for the total bill is as follow;

Change in total cost [ $4,000 - $2,655 ] = $1,345

Change in minutes [ 460 - 180 ] = 280

Therefore,

Variable cost per minute = $1,345 ÷ 280

= $4.80 per minutes

Also,

Variable costs for January

= 460 minutes * 4.80 per minutes

= $2,208

Total fixed costs =Total mixed cost - Total variable cost

= $4,000 - $2,208

= $1,792

For 390 minutes used by the company,

Total costs would be

= [390 minutes * $4.80 per minutes] + $1,792

= $1,872 + $1,729

= $3,601