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 300 $5,000 February 650 6,050 March 325 5,200 April 475 5,750 May 550 6,050 June 575 6,200 July 600 6,250 August 350 5,100 September 700 6,600 Required: 1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled. 2. Using these estimates, calculate Mountain's total cost for filling 450 cavities.

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Business

Lawrence Ortiz

26 January, 15:57

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 300 $5,000 February 650 6,050 March 325 5,200 April 475 5,750 May 550 6,050 June 575 6,200 July 600 6,250 August 350 5,100 September 700 6,600 Required: 1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled. 2. Using these estimates, calculate Mountain's total cost for filling 450 cavities.

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Nigel Harrington · Answer 1

Instructions are listed below

Explanation:

Giving the following information:

Month, cavities, total cost:

January 300 $5,000

February 650 $6,050

March 325 $5,200

April 475 $5,750

May 550 $6,050

June 575 $6,200

July 600 $6,250

August 350 $5,100

September 700 $6,600

A)

Variable cost per unit = (Highest activity cost - Lowest activity cost) / highest activity units - Lowest activity units)

Variable cost per unit = (6600 - 5000) / (700 - 300) = $4

Fixed costs = Highest activity cost - (Variable cost per unit * HAU)

Fixed costs = 6600 - (4*700) = $3,800

Fixed costs = LAC - (Variable cost per unit * LAU)

Fixed costs = 5000 - (4*300) = $3,800

B) Q = 450

Total cost = 3800 + 450*4 = $5,600