Annie runs a fitness and nutrition center. She has learned that overhead costs are a function of how many clients she serves each month. She gathered the following data for the last six months and needs to forecast overhead costs for November and December based past history. Annie uses the high-low method to estimate her overhead costs and has asked you to confirm her calculations. Month Number of Clients Store Overhead Costs May 210 $ 22,100 June 175 $ 26,090 July 158 $ 18,820 August 130 $ 19,150 September 185 $ 22,133 October 200 $ 23,035 November (est.) 225 ? Required: 1) Calculate variable overhead cost per unit. 2) Calculate fixed overhead cost per month. 3) Use your answers to parts 1 and 2 to determine the store’s contribution margin and net operating income for NOVEMBER. Sales are estimated to be $100,000, all variable costs other than overhead are $40,000; fixed selling and administration costs are $25,000
Annie runs a fitness and nutrition center. She has learned that overhead costs are a function of how many clients she serves each month. She gathered the following data for the last six months and needs to
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