Oak Island Amusements Center provides the following data on the costs of mainten

Question

Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years: Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. (Enter your answer in dollars not in thousands of dollars. Round your variable cost answer to 2 decimal places.) The company expects a record 2,200.000 visitors next year. What woukJ be the estimated maintenance ousts? (Enter your answers in dollars not in thousands of dollars.)

Explanation / Answer

Variable cost per visitor = Total maintenance cost at high level - Total cost at low level / High level - Low level

= 3660-2542/2700-1840

= 1118/860 i.e 1.3per visitor

Fixed cost = Total cost - Total variable cost

= 3660-( 2700*1.3) i.e 150

b) Estimated maintenance cost =( 220000*1.3)+150 i.e 286150

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