After graduating from dental school two years ago Dr Lauren

After graduating from dental school two years ago, Dr. Lauren Farish purchased the dental practice of a long-time dentist who was retiring. In January of this year she had to replace the outdated autoclave equipment she inherited from the previous dentist. Now, as she is preparing her budget for next year, she is concerned about understanding how her cost for sterilizing her dental instruments has changed. She has gathered the following information from her records: Month Number of instruments used Total autoclave cost January 600 $7,400 February 500 6,500 March 700 7,000 April 900 9,000 May 800 7,600 June 1,000 8,500 July 1,200 10,000 August 1,100 9,800

Solution

high low method instrument cost high 1,200 10,000 low -500 -6,500 Difference 700 3,500 Variable cost = 3500/700 5 per instrument fixed cost = total cost- variable cost 10,000 -1200*5 4000 answer Cost formula $5 *# of instrument + $4,000 total cost 1150*5 +4000 9750