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uisa Crimini has been operating a beauty shop in a college town for the past 10 years. Recently, Luisa rented space next to her shop and opened a...

uisa Crimini has been operating a beauty shop in a college town for the past 10 years. Recently, Luisa rented space next to her shop and opened a tanning salon. She anticipated that the costs for the tanning service would primarily be fixed, but found that tanning salon costs increased with the number of appointments. Costs for this service over the past 8 months are as follows:

  Tanning  Month Appointments Total Cost

January 700 $1,752

February 2,100 $2,130

March 3,100 $2,760

April 2,400 $2,500

May 1,500 $1,700

June 2,300 $2,275

July 2,190 $2,200

August 3,100 $2,620

Required:

2. Using the high-low method, compute the variable rate for tanning. Compute the fixed cost per month. Round the variable rate per tanning appointment to the nearest cent and use it in your further calculations. Round the fixed cost per month to the nearest dollar and use it in your further calculations.


Variable rate for tanning$ 

Fixed cost per month$


3. Using the variable rate and fixed cost, what is the cost formula for tanning services?


 


4. Calculate the total predicted cost of tanning services for September for 2,500 appointments using the formula found in Requirement 3. Of that total cost, how much is the total fixed cost for September? How much is the total predicted variable cost for September? If required, round the final answers to the nearest dollar.


Total predicted cost for September$

Total fixed cost for September$

Total predicted variable cost for September$


5. Which of the following statements is correct when luisa uses the high-low method to estimate the costs?

Top Answer

b).Variable Cost per Unit = ($2,760 − $1,700) ÷ (3,100 − 70) = 0.44 cent per unit Total... View the full answer

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