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Rooter's Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel...

Rooter's Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay $150 per night. Data for the past 7 months are as follows: January February March April May June July Number of rooms cleaned 250 160 200 150 300 170 260 Cleaning cost $6,450 $4,060 $5,100 $4,100 $6,760 $4,200 $6,530 How much are estimated monthly variable costs using the high-low method?

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Expert Solution

Ans. Months Variable cost
January (250*17.73) 4432.5
February (160*17.73) 2836.8
March (200*17.73) 3546
April (150*17.73) 2659.5
May (300*17.73) 5319
June (170*17.73) 3014.1
July (260*17.73) 4609.8
*Calculations:
   Number of Cleaning
Months rooms cleaned cost
January 250 6450
February 160 4060
March 200 5100
April 150 4100
May 300 6760
June 170 4200
July 260 6530
Variable cost per unit =   (Highest Total cost - Lowest total cost) / (Highest Units - Lowest units)
(6760 - 4100) / (300 - 150)
17.73333
*Highest units has the highest cost & Lowest units has the lowest cost (assumed).

jeff jeffy answered 1 year ago
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