Question

Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the following for the past nine months:

Month	Number of Cavities Filled	Total Cost
January	650	$6,200
February	500	5,750
March	625	5,550
April	425	5,550
May	600	5,850
June	450	5,150
July	575	6,150
August	700	6,100
September	350	5,050

Required:
1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled. (Round your answers to 2 decimal places.)

Fixed Cost
Variable Cost per Unit

2. Using these estimates, calculate Mountain’s total cost for filling 400 cavities.

Estimated Total Cost :

Answer 1

Variable cost per cavity = Change in cost/change in activity

                                   = (6100-5050)/(700-350)

Variable cost per cavity = 3 per cavity

Fixed cost = Total cost-variable cost

                 = 6100-(700*3)

FIxed cost = 4000

Estimated total cost on 400 cavities = (400*3)+4000 = 5200