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The number of X-rays taken and X-ray costs over the last nine months in a hospital...

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Accounting

The number of X-rays taken and X-ray costs over the last ninemonths in a hospital are given below:

Month X-Rays Taken X-Ray Costs

January 6,250 $28,000

February 7,000 $29,000

March 5,000 $23,000

April 4,250 $20,000

May 4,500 $22,000

June 3,000     $17,000

July 3,750 $18,000

August 5,500 $24,000

September 6,750    $28,500

Using the high-low method, what is the hospital’s estimatedmonthly fixed X-ray cost?

Answer & Explanation Solved by verified expert
3.9 Ratings (587 Votes)

X-Rays Taken

X-Rays cost

High activity level (February) (A)

              7,000

$29,000

Low activity level (June) (B)

              3,000

$17,000

Change in how - low activity (C=A-B)

              4,000

$12,000

Variable cost per unit: change in cost / change in activity

change in cost (A)

$12,000

change in activity (B)

              4,000

Variable cost per unit (C=A/B)

$3

Fixed cost per month

Total X ray cost at 7,000 units activity

$29,000

Less: Variable cost (7,000 units*$3 variable cist per unit)

$21,000

Fixed cost per month

$8,000

Ans

Fixed cost per month

$8,000

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