Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC Medical Clinic offers a number of specialized medical services. A review of data for the year just ended revealed variable costs of $32 per

ABC Medical Clinic offers a number of specialized medical services. A review of data for the year just ended revealed variable costs of $32 per patient day; annual fixed costs of $480,000, which are incurred evenly throughout the year; and semi variable costs that displayed the following behavior at the "peak" and "valley" of activity:

January (2,400 patient days): $258,400

August (2,900 patient days): $278,900

Required: A. Calculate the total cost for an upcoming month (2,800 patient days) if current cost behavior patterns continue. ABC uses the high-low method to analyze cost behavior.

B. There is a high probability that ABC's volume will increase in forthcoming months as patients take advantage of new scientific advances. Can the data and methodology used in part (a) for predicting the costs of 2,800 patient days be employed to estimate the costs for, say, 3,800 patient days? Why or why not?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Accounting And Principles Of Financial Accounting

Authors: Belverd E Needles, Marian Powers, Susan V Crosson

12th Edition

1133962459, 9781133962458

More Books

Students also viewed these Accounting questions

Question

Define epistemology.

Answered: 1 week ago