# Cost Function using High Low Method

I believe that I have done #1 correctly. I am confused as to how to figure out question #2. Please show all calculations used to arrive at the answer.

The number of X-rays taken and X-ray costs at a hospital over the last nine months are:

Month X-Rays Taken X-Ray Cost

January 6,250 $28,000

February 7,000 29,000

March 5,000 23,000

April 4,250 20,000

May 4,500 22,000

June 3,000 17,000

July 3,750 18,000

August 5,500 24,000

September 5,750 26,000

1. Use high-low method, estimate the cost formula for X-ray costs.

29,000 17,000 = 12,000 = $3.00

7,000 3,000 4,000

$29,000

-21,000 ($3.00 X 7,000 = 21,000)

$ 8,000

2. Using the cost formula you derived above, what X-ray costs would you expect to be incurred during a month in which 4,600 X-rays are taken?

29,000 17,000 = 12,000 = $5.00

7,000 4,600 2,400

$29,000

35,000 ($5.00 X 7,000 = 35,000)

https://brainmass.com/business/accounting/cost-function-using-high-low-method-68206

#### Solution Preview

We first find the cost function. We take the highest and the lowest cost.

7,000 xrays cost 29,000

3,000 x rays cots 17,000

Then take the ...

#### Solution Summary

The solution explains how to derive the cost function using high low method and to use the cost function to calculate the total costs.