The number of Xrays and Xray costs over the last nine months

 The number of X-rays and X-ray costs over the last nine months in Beverly Hospital are given below:  Month              X-Ray Costs             X-Rays Taken January             $26,000                   6,250 February             29,000                   7,500 March                22,000                   5,000 April                20,700                   4,250 May                  21,000                   4,500 June                 24,000                   5,500 July                 19,200                   3,750 August               16,000                   2,500 September            24,600                   5,750  Beverly Hospital expects to take 5,900 X-rays during October.  Using the high-low method, calculate Beverly Hospital\'s expected X-ray cost for October.

Solution

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(29000-16000)/(7500-2500)

=$2.6 per X-Ray

Total fixed cost=29000-(7500*2.6)

=$9500

Hence expected X-ray cost for October=Variable cost+Fixed cost

=(2.6*5900)+9500

=$24840.

NOTE:Variable cost per unit and Total fixed costs do not change with change in units.

 The number of X-rays and X-ray costs over the last nine months in Beverly Hospital are given below: Month X-Ray Costs X-Rays Taken January $26,000 6,250 Februa

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