Frank Company operates a cafeteria for its employees. The number of meals served

Question

Frank Company operates a cafeteria for its employees. The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria are given below: Meals served Cafeteria costs Week 1 1,500 (Cafeteria cost) $4,800 Week 2 (1,600meal, $5,080cost) Week 3 (1,800, $5,280) Week 4 (1,450meals, $4,900 cost) Week 5 (1,200meal, $4,000cost) Week 6 (1,650, $5,100) Week 7 (1,900, $5,400) Assume that the relevant range includes all of the activity levels mentioned in this problem. 3) Assume that the cafeteria expects to serve 1,850 meals during Week 8. Using the high-low method, the expected total cost of the cafeteria would be:

A) $5,340 B) $5,180 C) $5,300 D) $4,375

Explanation / Answer

variable cost=high cost -low cost/high -low meals=5,400-4,000/1900-1200=$2.00 per unit

Fixed cost=

week5

4,000-1200*2=$1,600.

total cost at 1,850 meals=1,850*2.00+1,600=$5,300.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.