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Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has...

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Accounting

Mountain Dental Services is a specialized dental practice whoseonly service is filling cavities. Mountain has recorded thefollowing for the past nine months:

MonthNumber of Cavities FilledTotal Cost
January525$6,100
February6506,000
March5506,100
April4755,850
May4005,250
June6256,400
July6006,350
August3005,000
September7006,600


Required:
1. Use the high-low method to estimate total fixed costand variable cost per cavity filled. (Round your answers to2 decimal places.)

Fixed Cost  
Variable cost per unit

2. Using these estimates, calculate Mountain’stotal cost for filling 450 cavities.

Estimated Total cost

Answer & Explanation Solved by verified expert
4.2 Ratings (784 Votes)

  • All working forms part of the answer
  • Working: HIGH LOW Method

Months

Units

Cost

High Level

Sept

                                700

$                     6,600.00

Low Level

Aug

                                300

$                     5,000.00

Difference

                                400

$                     1,600.00

A

Difference in Cost

$                     1,600.00

B

Difference in units

                                  400

C = A/B

Variable cost per unit

$                             4.00

Working

High Level

Low Level

A

Total Cost

$                   6,600.00

$                     5,000.00

B

Total Units

700

300

C

Variable cost per unit

$                           4.00

$                             4.00

D = B x C

Total Variable cost

$                   2,800.00

$                     1,200.00

E = A - D

Total Fixed Cost

$                   3,800.00

$                     3,800.00

  • Requirement 1

Fixed Cost = $ 3,800

Variable Cost per unit = $ 4.00

  • Requirement 2

Total cost for 450 cavities = $ 3800 + ($4 x 450)
= 3800 + 1800
= $ 5,600 = Answer
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