Oak Island Amusements Center provides the following data on the costs of maintenance and the...
Question:
Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years.
| Number of Visitors per Year (thousands) | Maintenance Costs ($000) |
|---|---|
| 1,865 | $3,547 |
| 2,045 | $3,898 |
| 3,400 | $6,310 |
Required:
a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor.
b. The company expects a record 2,700,000 visitors next year. What would be the estimated maintenance costs?
Cost Accounting:
Cost accounting is a subset of managerial accounting that focuses on the proper costing of products or services. It can be computed by a particular adopted method like process costing, job costing, etc.
Answer and Explanation: 1
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Using the high-low method, the Oak Island Amusements Center's variable cost must be computed as follows.
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High-Low Method Accounting: Formula & Examples
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Chapter 22 / Lesson 29
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Understand the high-low method in accounting. Learn the formulas for the high-low method. Learn how to compute variable cost per unit, fixed cost, and cost model.
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