Jones Ice Cream Stand is operated by Mr. Jones and experiences different sales patterns throughout the year. To plan for the future, Mr. Jones wants to determine its cost behavior patterns. He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served. The variable cost per ice cream cone using the high-low method is
A)$0.41
B)$2.42
C)$0.73
D)$1.20

Question

Jones Ice Cream Stand is operated by Mr. Jones and experiences different sales patterns throughout the year. To plan for the future, Mr. Jones wants to determine its cost behavior patterns. He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served.  The variable cost per ice cream cone using the high-low method is
A)$0.41 
B)$2.42 
C)$0.73 
D)$1.20

Quizplus · Accepted Answer

Using the high-low method, we need to first identify the period with the highest and lowest number of ice cream cones served and the corresponding costs. 
From the information provided, we can see that in May, 2,400 cones were sold at a cost of $1,292. In August, 4,800 cones were sold at a cost of $2,536. 
To find the variable cost per cone, we can use the formula:
Variable cost per unit = (Total cost at highest activity level - Total cost at lowest activity level) / (Highest activity level - Lowest activity level) 
Variable cost per unit = ($2,536 - $1,292) / (4,800 - 2,400) 
Variable cost per unit = $1,244 / 2,400 
Variable cost per unit = $0.52 
Therefore, the correct answer is A) $0.41, as it is the closest option to $0.52.

Jones Ice Cream Stand Is Operated by Mr