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EA12.
LO 2.3Markson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would Markson pay if it made 7,500 copies?

Respuesta :

Answer:

= $800

Explanation:

The computation of the total paying cost is shown below:

Variable cost per copies = (High cost - low cost) ÷ (High number of copies - low number of copies)

= ($360 - $280)  ÷ (5,000 copies - 3,000 copies)

= $80 ÷ 2,000 copies

= $0.04

Now the total paying cost equal to

= Fixed cost + (High number of copies × Variable cost per copies)

= $500 + (7,500 copies × $0.04)

= $500 + $300

= $800

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