The phone bill for a company consists of both fixed and variable costs
Refer to the four-month data below and apply the high-low method to answer the question. (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
Minutes Total Bill
January 460 $3,000
February 200 $2,675
March 180 $2,630
April 320 $2,840
What is the fixed portion of the total cost?
A) $607
B) $370
C) $2,393
D) $2,630
C .C) Variable cost per unit = Change in total cost / Change in volume of activity
Variable cost per unit = (Highest cost - Lowest cost) / (Highest volume - Lowest volume)
Change in total cost ($3,000 - $2,630 ) $370
Change in minutes (460 — 180 ) 280
Variable cost per minute ($370 / 280 ) $1.32
Variable cost for January = 460 minutes x $1.32 per minute = $607
Total fixed costs = Total mixed cost - Total variable cost
Total fixed costs = $3,000 - $607 = $2,393
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