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:

Required:

a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. (Enter your answers in dollars not in thousands of dollars. Round "Variable cost" answer to 2 decimal places.)

b. The company expects a record 2,500,000 visitors next year. What would be the estimated maintenance costs? (Enter your answer in dollars not in thousands of dollars.)

Number of Visitors per Year: (thousands) Maintenance Costs
($000) 1,910 $ 3,075 2,090 3,372 4,350 6,735

Explanation / Answer

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a Variable Cost (6735-3075)/(4350-1910) 1.5 Per visitor Fixed Cost 6735000-(1.5*4350000) 210000 b Fixed Cost+Variable cost*Visitor 210000+(1.5*2500000) 3960000

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