4 Miranda was reviewing the water bill for her dog day care

4) Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill, 54,000, occurred in July when she washed 400 dogs and her lowest bill, $3,100, occurred in February when she washed 275 do What was the fixed cost associated with Miranda\'s water bill? (10 Points) A) $3,845.75 B) $4,600 C) $7.20 D) $5.21 Page | 2

Solution

Using the High Low Method: Month No. of Dogs Amount Cost Driver - Highest July              400          4,000 Cost Driver - Lowest Feb              275          3,100 Difference              125              900 Variable Cost per dog= $900 / 125 nos = $7.20 per dog Fixed Cost = $4,000 - $7.20 X 400 dogs Fixed Cost = $1,120