Question

After graduating from dental school two years ago, Dr. Margaret Moore purchased the dental practice of a long-time dentist who was retiring. In January of this year, she had to replace the outdated autoclave equipment she inherited from the previous dentist. Now, as she is preparing her budget for next year, she is concerned about understanding how her cost for sterilizing her dental instruments has changed. She has gathered the following information from her records: Number of instruments used 850 750 920 Month January February March April May June July August 950 Total autoclave cost $6,855 6,250 7,319 7,760 8,570 7,258 8,465 7,711 1,150 900 1,050 975

Answer 1

Answer :-

High Point = $1,900 + (1,150*$5.80)

High Point = $8,570

Low Point = $1,900 + ( 750 * $5.80)

Low Point = $6,250

Variable cost = (Cost at high point - Cost at low point)/(Volume at high point - Volume at low point)

Variable cost = $8,570 - $6,250 / 1,150 - 750

Variable cost = $2,320 / 400

Variable cost = $5.80 per instrument

Fixed cost = $8,570 - (1,150*$5.80)

Fixed cost = $8,570 - $6,670

Fixed cost = $1,900

I hope you understand, if you have any query feel free to ask in comment section. Thanks