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billafin billafin
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4 months ago
Dana owns her own real estate agency. She has been working hard to increase her client base. She offers the most comprehensive advertising campaign in the city and it has been paying off by the steady increase in the number of listings over the last several months. However, Dana is concerned that her extensive cost for advertising is eating into her profits. It is difficult to determine how much she spends on advertising for each listing because some of her advertising sources are fixed amounts each month and others are more variable in nature. She would like to analyze the following information to determine how her advertising costs behave based on the number of listings.


Number of Advertising
MonthListingsCost
March22$15,280
April2617,640
May3523,145
June4227,205
July4830,565
August5132,485
September5031,835
October5636,020
November5434,920

If Dana believes she will have 52 listings in December, what is her expected cost for advertising?

▸ $34,310

▸ $35,470

▸ $33,378

▸ $33,580
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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flash33101flash33101
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$33,580

($36,020 - $15,280) ÷ (56 - 22) = $610 variable cost per listing; $36,020 = ($610 × 56) + FC, Fixed Cost = $36,020 - $34,160; Fixed Cost = $1,860, Expected advertising cost = ($610 × 52) + $1,860 = $33,580
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