Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 33

Using a Cost Formula
City Ambulance Service estimates the monthly cost of responding to emergency calls to be $15,000, plus $200 per call.
a. In a month in which the company responds to 150 emergency calls, determine the estimated:
1. Total cost of responding to emergency calls.
2. Average cost of responding to emergency calls.
b. Assume that in a given month, the number of emergency calls was unusually low. Would you expect the average cost of responding to emergency calls during this month to be higher or lower than in other months? Explain.