Question

The Browne's Town housing Scheme operates a Laundromat, solely for the purpose of providing
laundering services to Tenants in residence. You have been hired as an accountant , to
analyze the cost of the laundering services. The Housing administration has assembled the data
for a twelve month period pertaining to the monthly total costs of providing the service and the
corresponding number of Tenants who used the laundering facilities each month.
The table below shows the monthly data collected over the academic year under review.

Month	Total Laundering Costs	# of Tenants Laundering
August	188000	1200
September	213100	1650
October	232000	2000
November	248200	2300
December	261700	2550
January	269800	2700
February	242800	2200
March	250900	2350
April	253600	2400
May	226600	1900
June	169900	850
July	161800	700

a) Determine the variable cost per student and the fixed cost using the high-low method.

b) What is the equation of the total mixed cost function?
c) In August of the upcoming academic year, the university expects the number of Tenants
using the Laundromat to increase to 3,400. What is the expected total laundering cost for
August?
d) From the data set given, generate the scatter diagram for Browne's Town Housing Scheme, clearly
showing the line of best fit (trend line).
e) Using the trend line, determine Browne Town's Housing Scheme fixed cost per month and the variable cost
per student. (Use 0 & 2,500 students.)
f) Based on the scatter gram, what is the equation of the total mixed cost function?

g) Which of the two methods would be more appropriate? Explain your answer.

Please Note: I need the Answers to E,F and G done by the same person who previously did the answers to A,B,C and D.

Answer 1

a. Given data Highest tenants laundering is in month of January Lowest tenants laundering is in month of July Total costs for the month of January = 269800 Total costs for the month of July = 161800 = 2700 = 700 Variable cost per Student= Highest Activity cost-Lowest Activity cost by high-low method Highest Activity units-Lowest Activity units = 269800-161800 2700-700 Variable cost per Students b Total Mixed cost Equation = ((Number of Students) x (Variable cost per student))+Total Fixed costs Fixed Costs =26980-2700(54) 124000 Let N be the total no of Students = (N x 54)+124000 c Total cost for the Month of August No of Students = 3400 Total cost = (54 x 3400)+124000 = 307600

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