Discuss laundry department fixed and variable cost structure

Reference no: EM131519009

Question: Darwin's HighFlyer Hotel has spare laundry capacity and is considering offering a laundry service to the Luigi Brothers who own three Italian restaurants. To aid deliberations concerned with what rate should be quoted when offering the service, the Laundry Manager has asked for your assistance in analysing the Laundry department's fixed and variable costs. From her departmental records, the laundry manager has extracted the following schedule of cost information.

Required: (a) Use the high-low method to determine the laundry department's fixed and variable cost structures.

(b) Provide an estimate of the total cost if 25,000 kilograms of laundry were processed in a month.

Reference no: EM131519009

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