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 monthly ﬁxed fee is:
A)$80.
B)$102.
C)$106.
D)$112.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

Using the high-low method, the variable cost per copy is ($360 - $280) / (7,000 - 5,000) = $0.04. The fixed fee can be calculated using either month's data. Using March: $360 = Fixed Fee + ($0.04 * 7,000), Fixed Fee = $360 - $280 = $80.