Question

Fulton and Sons, Inc. presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Fulton made 9,000 copies and paid a total of $420 in March; in May, the firm paid $380 for 5,000 copies. The company uses the high-low method to analyze costs. How much would Fulton pay if it made 5,200 copies? (Round your intermediate calculations to 3 decimal places final answer to 2 decimal places.) Multiple Choice $464.50. $404.00 $382.00. < Prey. 5 of 30 | Next > Que

Answer 1

C. $382.00

Variable cost per unit = (High − Low costs) / (High − Low Units) = ($420 − $380) / (9,000 − 5,000) = $0.010 per copy

Fixed costs = $420 - (9,000 × $0.010) = $330

Total cost @ 5,200 copies = (Units × Variable cost per unit) + Fixed costs

Total cost @ 5,200 copies = (5,200 × $0.010) + $330

Total cost @ 5,200 copies = $382.00