Question

Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the following for the past nine months:

Month	Number of Cavities Filled	Total Cost
January	525	$6,100
February	650	6,000
March	550	6,100
April	475	5,850
May	400	5,250
June	625	6,400
July	600	6,350
August	300	5,000
September	700	6,600

Required:
1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled. (Round your answers to 2 decimal places.)

Fixed Cost
Variable cost per unit

2. Using these estimates, calculate Mountain’s total cost for filling 450 cavities.

Estimated Total cost

Answer 1

• All working forms part of the answer
• Working: HIGH LOW Method

	Months	Units	Cost
High Level	Sept	700	$                     6,600.00
Low Level	Aug	300	$                     5,000.00
Difference		400	$                     1,600.00

A	Difference in Cost		$                     1,600.00
B	Difference in units		400
C = A/B	Variable cost per unit		$                             4.00
Working		High Level	Low Level
A	Total Cost	$                   6,600.00	$                     5,000.00
B	Total Units	700	300
C	Variable cost per unit	$                           4.00	$                             4.00
D = B x C	Total Variable cost	$                   2,800.00	$                     1,200.00
E = A - D	Total Fixed Cost	$                   3,800.00	$                     3,800.00

• Requirement 1

Fixed Cost = $ 3,800

Variable Cost per unit = $ 4.00

• Requirement 2

Total cost for 450 cavities = $ 3800 + ($4 x 450)
= 3800 + 1800
= $ 5,600 = Answer