The Movie Company has been in business for 5 months and wants to estimate its variable cost of tickets sold. Using the data from this chart and the high-low method, what is the variable cost for the Movie Company?

 Knowledge Check 01
 
Month     Tickets Sold     Cost
March     1,500     $ 10,000
April     2,000     $ 15,000
May     3,500     $ 19,000
June     2,500     $ 17,000
July     4,000     $ 22,000

 
The Movie Company has been in business for 5 months and wants to estimate its variable cost of tickets sold. Using the data from this chart and the high-low method, what is the variable cost for the Movie Company? (Round the cost to 2 decimal places.)

multiple choice

    $3.33 per ticket
    $4.80 per ticket Correct
    $3.50 per ticket
    $7.00 per ticket

Explanation

Knowledge Check 01
 
Variable cost = [(Cost at highest activity of $22,000 − Cost at lowest activity of $10,000) ÷ (Highest activity of 4,000 tickets − Lowest activity of 1,500 tickets)] = $4.80 per ticket.