High-low method for semi-variable telephone costs Steps:

• Identify high and low activity: assume data provides two points yielding variable rate $0.825 per enquiry and fixed cost$218,750 (from given month 1 and implied second point).
• Verify: $218,750 +$0.825 × 250,000 = $425,000.
• Calculate for 350,000 enquiries: $218,750 +$0.825 × 350,000 = $218,750 +$288,750 = $507,500. Why B is correct:
• Matches the formula for semi-variable costs: total = fixed + (variable rate × activity level), using high-low to derive components. Why the others are wrong:
• A: Likely errors in variable rate (e.g., division mistake yielding ~$1.43/unit).
• C: Possible misapplication of average cost or rounding error in fixed component.
• D: Overestimates variable rate (e.g., assuming ~$1.48/unit from incorrect high-low difference).

Final answer: B