Mr. Timmy Roberto, owner of Lube n' Go Car Service Center is interested in determining the fixed and variable costs of performing a standard oil change. Since the oil changes are fairly standard, each one taking about the same amount of time and using about the same amount of grease, paper towel, etc., Timmy thinks the number of oil changes would be a good independent variable. The total monthly cost includes the salaries of the two service persons, depreciation on the facility and equipment, utilities, and supplies such as grease and wipes. (The cost of oil is not included, as it differs from car to car and is charged to the customer based on the number of quarts actually used.) Data for the past eight months are as follows: Month No. of oil changes Total cost. May June- July August September - October 1,200 - -1,400 -1,370 1,250 --890 -900 -850 - -700 -7,250.00 7,950.00 - 8,300.00 7,425.00 5,730.00 5,730.00 - 5,450.00 - 5,150.00 November - December - Mr. Roberto would like to know how much it will cost to change oil 1,000 times, and 2,000 times. To do this, the following questions need to be answered. How much is the change in cost using high-low method? How much is the change in the number of oil changes using high-low method? How much is the variable rate? How much is the fixed cost? How much is the cost to change oil 1,000 times? How much is the cost to change oil 2,000 times is?
Mr. Timmy Roberto, owner of Lube n' Go Car Service Center is interested in determining the fixed and variable costs of performing a standard oil change. Since the oil changes are fairly standard, each one taking about the same amount of time and using about the same amount of grease, paper towel, etc., Timmy thinks the number of oil changes would be a good independent variable. The total monthly cost includes the salaries of the two service persons, depreciation on the facility and equipment, utilities, and supplies such as grease and wipes. (The cost of oil is not included, as it differs from car to car and is charged to the customer based on the number of quarts actually used.) Data for the past eight months are as follows: Month No. of oil changes Total cost. May June- July August September - October 1,200 - -1,400 -1,370 1,250 --890 -900 -850 - -700 -7,250.00 7,950.00 - 8,300.00 7,425.00 5,730.00 5,730.00 - 5,450.00 - 5,150.00 November - December - Mr. Roberto would like to know how much it will cost to change oil 1,000 times, and 2,000 times. To do this, the following questions need to be answered. How much is the change in cost using high-low method? How much is the change in the number of oil changes using high-low method? How much is the variable rate? How much is the fixed cost? How much is the cost to change oil 1,000 times? How much is the cost to change oil 2,000 times is?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Mr. Timmy Roberto, owner of Lube n' Go Car Service Center is interested in determining the fixed
and variable costs of performing
a standard oil change. Since the oil changes are fairly standard, each one taking about the same
amount of time and using about
the same amount of grease, paper towel, etc., Timmy thinks the number of oil changes would be a
good independent variable. The
total monthly cost includes the salaries of the two service persons, depreciation on the facility and
equipment, utilities, and supplies
such as grease and wipes. (The cost of oil is not included, as it differs from car to car and is charged
to the customer based on the
number of quarts actually used.) Data for the past eight months are as follows:
Month No. of oil changes Total cost.
May -
June-
July
August -
September
October -
November
December
- 1,200-
-1,400
-1,370
-1,250
-890
-900
--850
--700
- 7,250.00
-7,950.00
- 8,300.00
-7,425.00
-5,730.00
-5,730.00
-5,450.00
5,150.00
Mr. Roberto would like to know how much it will cost to change oil 1,000 times, and 2,000 times. To
do this, the following questions
need to be answered.
How much is the change in cost using high-low method?
How much is the change in the number of oil changes using high-low method?
How much is the variable rate?
How much is the fixed cost?
How much is the cost to change oil 1,000 times?
How much is the cost to change oil 2,000 times is?
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