Question

Matrix hair is a hair salon situated in a well-known shopping mall in Cape Town. The hair salon has a contract with a cleaning company that cleans the salon on a daily basis. The cost-structure of the total cleaning cost for a specific month consists of a fixed monthly fee and an additional cost per hour worked by cleaning staff. The fixed monthly fee charged by the cleaning company is constant between zero and 70 hours per month, but increases to a higher amount when more than 70 hours are worked in a specific month.

The following schedule lists the total costs and hours cleaning staff worked at the salon during the past 12 months:

	Rand				Hours worked
January		6,080				72
February		5,520				68
March		5,475				65
April		5,400				60
May		5,535				69
June		6,095				73
July		6,110				74
August		5,460				64
September		6,170				78
October		5,490				66
November		5,490				66
December		6,080				72

Required:

Complete the following table using the High-low method:

Variable cost per hour worked by cleaning staff ……………………

Total fixed cost for a month in which less than 70 hours are worked by cleaning staff …………………………..

Total fixed cost for a month in which more than 70 hours are worked by cleaning staff ………………………..

Answer 1

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