Fulton and Sons, Inc.presently leases a copy machine under an agreement that calls for a ﬁxed fee each month and a charge for each copy made.Fulton made 7,000 copies and paid a total of $360 in March; in May, the ﬁrm paid $280 for 5,000 copies.The company uses the high-low method to analyze costs. Fulton's variable cost per copy is:
A)$0.040.
B)$0.051.
C)$0.053.
D)$0.056.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

The variable cost per copy is calculated using the high-low method: (Cost at high activity level - Cost at low activity level) / (High activity level - Low activity level) = ($360 - $280) / (7,000 - 5,000) = $80 / 2,000 = $0.040.