Question

After graduating from dental school two years ago, Dr. Lauren Farish purchased the dental practice of a long-time dentist who was retiring. In January of this year she had to replace the outdated autoclave equipment she inherited from the previous dentist. Now, as she is preparing her budget for next year, she is concerned about understanding how her cost for sterilizing her dental instruments has changed. She has gathered the following information from her records: Month Number of instruments used Total autoclave cost January 650 $7,460 February 550 6,546 March 750 7,188 April 950 9,024 May 850 7,768 June 1,050 8,508 July 1,250 10,096 August 1,150 9,910

Using the high-low method, what is the variable cost of sterilizing an instrument using the new equipment? (Round answer to 2 decimal places, e.g. 52.75.) Variable cost $Enter the Variable cost in dollars per instrument rounded to 2 decimal places per instrument LINK TO TEXT LINK TO VIDEO

What is the fixed cost of the autoclave equipment? (Round answer to 0 decimal places, e.g. 5,275.) Fixed cost $enter the fixed cost in dollars rounded to 0 decimal places LINK TO TEXT LINK TO VIDEO

What is the cost formula that Dr. Farish should use for estimating autoclave sterilization costs for next year’s budget? Formula of total cost Select a formula of total cost ($3,758 ÷ # of instruments) - $5.07($5.07 × # of instruments) - $3,758($3,758 × # of instruments) - $5.07($3,758 × # of instruments) + $5.07($5.07 ÷ # of instruments) + $3,758($3,758 ÷ # of instruments) + $5.07($5.07 ÷ # of instruments) - $3,758($5.07 × # of instruments) + $3,758 LINK TO TEXT LINK TO VIDEO

If Dr. Farish estimates she will use 1,192 instruments next month, what cost should she include in her budget for instrument sterilization? (Round answer to 0 decimal places, e.g. 5,275.) Total cost $Enter the total cost in dollars rounded to 0 decimal places

Answer 1

Answers

Given that:

	Lowest range	Highest range
Cost	$          6,546	$         10,096
Instruments	550	1,250

Now,

1.

As per High Low Method,
Variable cost per instruments =	Change in costs / change in hours
Variable cost per instruments =	($ 10096 - $ 6546) / (1250 - 550)
Variable cost per instruments =	$ 3550 / 700
Variable cost per instruments =	$ 5.07

2.

Fixed Cost =	Total Cost - Variable Cost
Fixed Cost =	Total Cost - (Variable Cost per hour * hours)
Fixed Cost =	$ 10096 - ($ 5.07142857142857 * 1250)
Fixed Cost =	$          3,757

3.

Cost = $ 3,757 + $ 5.07 * Instruments

4.

Cost = $ 3,757 + $ 5.07 * Instruments

Cost = $ 3,757 + $ 5.07 * 1192

Cost = $ 9,800

In case of any doubt or clarification, you're welcome to come back via comments.