Problem 5 – 10 points The following are monthly totals taken from the log of a c
ID: 2451964 • Letter: P
Question
Problem 5 – 10 points
The following are monthly totals taken from the log of a colorphotocopying machine used by the Skywalker Company. Cost wasbased on a flat fee plus a cost per copy made after a minimumnumber of copies had been made each month.
Month # ofcopies Total cost
January 35,200 $10,800
February 30,400 9,600
March 32,900 10,225
April 40,300 12,075
May 38,400 11,600
June 48,900 14,225
Part a
To differentiate the variable and fixed costs in the use of thismachine for future planning, use the high-low method to determinethe variable cost per copy and compute the flat fee.
Part b
Calculate the total cost for using the photocopying machine if44,000 copies are made.
Explanation / Answer
Part a High-low method 14,225-9,600 48,900-30,400 variable cost =0.25 / unit Total cost = 14,225 , 48,900 copies Fixed cost = Total cost - Variable cost =14,225 - (48,900 * 0.25) = 14,225 - 12,225 Fixed cost = 2,000 Part b Total cost if 44,000 copies are made Total cost = VC + FC Total cost =( 44,000*0.25) + 2,000 = 13,000