The phone bill for a corporation consists of both fixed and variable costs. Refer to the fourminusmonth data below and apply the highminuslow method to answer the question. Minutes Total Bill January 470 $ 4 comma 500 February 200 $ 2 comma 695 March 180 $ 2 comma 650 April 320 $ 2 comma 830 If the company uses 390 minutes in May, how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Total cost = $3,989.65

Explanation:

Giving the following information:

Minutes Total Bill

January 470 $4,500

February 200 $2,695

March 180 $2,650

April 320 $2,830

First, we need to calculate the unitary variable cost and fixed costs:

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

Variable cost per unit = (4,500 - 2,650) / (470 - 180)

Variable cost per unit = $6.37931

Fixed costs = Highest activity cost - (Variable cost per unit * HAU)

Fixed costs = 4,500 - (6.37931*470)

Fixed costs = $1,501.72

Fixed costs = LAC - (Variable cost per unit * LAU)

Fixed costs = 2,650 - (6.37931*180)

Fixed costs = $1,501.72

If the company uses 390 minutes in May:

Total cost = 1,501.72 + 6.37931*390

Total cost = $3,989.65