Food Service Corp. offers a meal service for commuting college students. In the
ID: 2329629 • Letter: F
Question
Food Service Corp. offers a meal service for commuting college students. In the month of January, 1,900 meals were served at a total cost of $5,400. In February, 1,450 meals were served at a total cost of $4,500, and the total number of meals served for March were 1,200 at a total cost of $4,000. Using the high-low method, the variable cost per unit is $2.00. What is the total fixed cost and the total variable cost for January?
a.The total fixed cost is $1,600, and the variable cost is $3,800.
b.The total fixed cost is $2,500, and the variable cost is $2,900.
c.The total fixed cost is $2,900, and the variable cost is $2,500.
d.The total fixed cost is $3,800, and the variable cost is $1,600.
Explanation / Answer
Total fixed costs=$5400-(2*1900)=$1600
Total fixed costs and variable costs do not change with change in units.
Hence total fixed costs for January=$1600
Total variable costs for January=($2*1900)=$3800
Hence the correct option is A.