The total cost at the activity level of 9,400 patient-visits per month should be:

A) $235,720
B) $249,250
C) $266,960
D) $250,640

Question

The total cost at the activity level of 9,400 patient-visits per month should be:A) $235,720B) $249,250C) $266,960D) $250,640

Ashley Garibaldi · Accepted Answer

Final Answer : B, Explanation :  Using the high-low method, we can calculate the variable cost per patient-visit:Variable cost = (Cost at high activity level - Cost at low activity level) / (High activity level - Low activity level)Variable cost = ($276,400 - $221,400) / (10,700 - 8,600)Variable cost = $0.50 per patient-visitTo calculate the total cost at an activity level of 9,400 patient-visits per month, we can use the following equation:Total cost = Fixed cost + (Variable cost per patient-visit x Activity level)Total cost = $191,250 + ($0.50 x 9,400)Total cost = $249,250Therefore, the best choice is B, which is $249,250.   Reference: CH09-Ref22Hallet Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During May, the company budgeted for 5,800 units, but its actual level of activity was 5,830 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:Data used in budgeting:   Actual results for May:

The total cost at the activity level of 9,400 patient-visits per month should be:

A) $235,720
B) $249,250
C) $266,960
D) $250,640

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