The manager at Screaming Trees has been trying to calculate the portion of the company's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of yards of mulch processed was highest in July, when the total monthly overhead costs totaled $ 28 comma 000 for 37 comma 000 yards of mulch processed. The lowest number of yards of mulch processed in the last twelve months occurred in October, when total overhead costs were $ 22 comma 000 for 25 comma 000 yards of mulch processed. What was the variable cost per yard

Question

Johnathon Mcpherson

Business

15 June, 04:10

The manager at Screaming Trees has been trying to calculate the portion of the company's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of yards of mulch processed was highest in July, when the total monthly overhead costs totaled $ 28 comma 000 for 37 comma 000 yards of mulch processed. The lowest number of yards of mulch processed in the last twelve months occurred in October, when total overhead costs were $ 22 comma 000 for 25 comma 000 yards of mulch processed. What was the variable cost per yard

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Krista Wilkerson · Answer 1

The variable cost per yard is $0.50

Explanation:

The computation of the variable cost per yard is shown below:

= (total monthly overhead costs - total overhead costs) : (total monthly overhead costs - total overhead costs)

= ($28,000 - $22,000) : ($37,000 - $25,000)

= $6,000 : $12,000

= $0.50

We have to make the difference between the highest and the lowest overhead cost and then do the proportionate between them