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?
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)
change in activity (B)
Variable cost per unit (C=A/B)
$3
Fixed cost per month
Total X ray cost at 7,000 units activity
Less: Variable cost (7,000 units*$3 variable cist per unit)
$21,000
$8,000
Ans
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