251,000 /70

November 246,000 /66

December 245,000 /65


Required:

  1. Use the four steps of the high-low method to estimate total fixed costs per month, and the variable cost per surgery. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v.
  2. Use the five steps of the scattergraph method to estimate total fixed costs per month, and the variable cost per surgery. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v.
  3. Use the results of the high-low method (a) and scattergraph method (b) to estimate costs for 70 surgeries. (You will have two different answers—one for each method.) Which approach do you think is most accurate and why?
  4. Assume Laser It charges $4,000 for each surgery performed. Use the high-low cost information (for 70 surgeries) how to prepare a contribution margin income statement. (Hint: You will only have one line item for variable costs and one line item for fixed costs.)