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?

= $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