Question

Suzy’s Cool Treatz is a snow cone stand near the local park. To plan for the future, the owner wants to determine her cost behavior patterns. She has the following information available about her operating costs and the number of snow cones served.

Month	Number of snow cones	Total operating costs
January	3,500	$5,000
February	3,800	$4,800
March	5,000	$6,800
April	3,600	$5,450
May	4,700	$6,200
June	4,250	$5,950

Suzy uses the high-low method to determine her operating cost equation. What are her estimated costs at 4628 snow cones? When calculating the variable cost per unit, round your answer to two decimal places before completing your calculations. Do not use dollar signs, commas or decimals in your answer. Input your answer to the nearest whole number.

Answer 1

SUZY'S FIXED COST AND VARIABLE COST PER UNIT OF CONE IS CALCULATED AS FOLLOW BY HIGH AND LOW METHOD

UNDER HIGH LOW METHOD VARIABLE COST AND FIXED COST CAN BE CALCULATED BY COMPARING THE TOTAL COST AT HIGH AND LOW LEVER

IN PRESENT QUESTION WE ARE COMPARING TOTAL COST AT LEVEL OF 3500 UNITS AND 5000 UNITS AS FOLLOW

UNITS

OPERATING COST

HIGH PRODUCTION

5000

6800

LOW PRODUCTION

3500

5000

DIFFERENCE IN HIGH AND LOW LEVEL

1500

1800

VARIABLE COST PER UNIT= DIFFERENCE IN HIGH AND LOW OPERATING COST/DIFFERENCE IN HIGH AND LOW UNIT

=6800-5000/5000-3500

=1800/1500

1.20

FIXED COST AT 3500 UNITS

=TOTAL OPERATING COST-VARIABLE COST OF 3500 UNITS

=5000-.1.20*3500

=5000-4200

FIXED COST

=800

CALCULATION OF COST FOR 4628 UNITS

SO OPERATING COST = FIXED COST+VARIABLE COST PER UNIT X UNITS

=800+1.20 X 4628

=800+5553.60

=6353.60

=6354

FEEL FREE TO ASK ANY CLARIFICATION IF ANY REQUIRED KINDLY PROVIDE FEED BACK BY THUMBS UP IF SATISFIED IT WILL BE HIGHLY APPRECIATED

THANK YOUR