Question

ABC Company provides a personal development seminar that is
popular with many companies. ABC Company charges $483 for
each seminar it conducts. The number of seminars offered
over the last six months along with the total costs of
offering these seminars appear below:

Month           Costs Incurred        Seminars Offered
January           $15,400                   55
February           14,200                   45
March              18,000                   60
April              14,700                   50
May                19,900                   75
June               16,500                   58

ABC Company expects to offer 65 seminars during July.

Using the high-low method, calculate ABC Company's expected
net income for July.

Answer 1

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

=(19900-14200)/(75-45)

=$190

Hence Total fixed cost=19900-(75*190)=$5650

Expected net income would be=Revenue-Total costs

Total revenue=(65*483)=$31395

Total costs would be=Total variable cost+Total fixed cost

=(190*65)+5650=$18000

Hence Expected net income=31395-18000

which is equal to

=$13395

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