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Michael is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year
Michael is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,312, Motor oil $2 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change since he will operate the business as a franchise. In addition, utility costs are expected vary with the quantity of oil changes as follows: Quantity of Oil Changes Utility Costs 4,400 $7,640 6,400 $9,300 9,400 $11,600 12,400 $14,600 14,800 $17,000 Michael anticipates that he can provide the oil change service with a filter at $28.92 each. (a) Using the high-low method, determine variable costs per unit and total fixed costs. (Round variable cost to 2 decimal places, e.g. 52.75.) Variable cost $ Fixed cost $ per unit
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