Answered

Louis​ Petit, a manager of Doggone​ Gorgeous, Inc., was reviewing the water bills of a dog daycare and spa. He determined that its highest and lowest bills of $ 3 comma 800 and $ 2 comma 400 were incurred in the months of May and​ November, respectively. If 600 dogs were washed in May and 100 dogs were washed in​ November, what was the fixed cost associated with the​ company's water​ bill

Answer :

facundobuzzetti

Answer:

Fixed costs= $2,120

Explanation:

Giving the following information:

The highest and lowest bills of $3,800 (May) and $2,400 (November)

600 dogs were washed in May and 100 dogs were washed in​ November.

To calculate the unitary variable cost and fixed cost, we need to use the high/low method:

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

Variable cost per unit= (3,800 - 2,400) / (600 - 100)=$2.8 per dog

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

Fixed costs= 3,800 - (2.8*600)= $2,120

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

Fixed costs= 2,400 - (2.8*100)= $2,120

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