Question

Data from the duplicating department of Fastcopy Ltd for the 5 months are as follow:

Month #Copies   Dept Costs

January    14,800 $12,830

February 16,000     13,930

March    20,000     17,300

April     23,600     19,430

May     18,500     15,800

What are the expected duplicating department costs for June if 19,000 copies are expected to be made?

$15,858

$15,980

$16,216

$18,580

Answer 1

• Working

	Months	Units	Cost
High Level	April	23,600	$                   19,430.00
Low Level	January	14,800	$                   12,830.00
Difference		8,800	$                     6,600.00
A	Difference in Cost		$                     6,600.00
B	Difference in units		8,800
C = A/B	Variable cost per unit		$                             0.75
Working		High Level	Low Level
A	Total Cost	$                 19,430.00	$                   12,830.00
B	Total Units	23600	14800
C	Variable cost per unit	$                          0.75	$                             0.75
D = B x C	Total Variable cost	$                 17,700.00	$                   11,100.00
E = A - D	Total Fixed Cost	$                   1,730.00	$                     1,730.00

• Cost of 19000 copies
  = $ 1730 + ($0.75 x 19000)
  = 1730 + 14250
  = $ 15,980
• Correct Answer = Option #2: $ 15,980