What are the expected average quarterly costs of running a consulting practice if fixed costs are expected to be $4,000 a month and variable costs are expected to be $100 per client for each quarter? Expected number of clients for the year are: $$\begin{array} { | c | c | c | c | }
\hline \text { Jan-March } & \text { April-June } & \text { July-Sep } & \text { Oct-Dec } \
\hline 110 & 140 & 150 & 100 \
\hline
\end{array}$$
A) $12,500
B) $24,500
C) $16,500
D) $19,500

Question

What are the expected average quarterly costs of running a consulting practice if fixed costs are expected to be $4,000 a month and variable costs are expected to be $100 per client for each quarter? Expected number of clients for the year are: $$\begin{array} { | c | c | c | c | } 
\hline \text { Jan-March } & \text { April-June } & \text { July-Sep } & \text { Oct-Dec } \
\hline 110 & 140 & 150 & 100 \
\hline
\end{array}$$
A) $12,500
B) $24,500
C) $16,500
D) $19,500

Quizplus · Accepted Answer

Fixed costs for a quarter will be 4,000 x 3 = $12,000.

Variable costs will be 100 x 11 = $1,100.

Total quarterly costs will be $13,100.

Expected total costs for the year will be $13,100 x 4 = $52,400.

Therefore, the average quarterly costs will be $52,400/4 = $13,100.

The closest answer is B, $24,500.

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