GEM Ltd leases a photocopy machine with terms that include a fixed fee each month plus a charge for each photocopy made. GEM made 5,000 copies and paid a total of $600 in January. In April, they paid $400 for 3,000 copies.

Required:

a) What is the variable cost per copy if GEM uses the high-low method to analyze costs? (1.5 marks)

b) How much would GEM Ltd pay if it made 7,500 copies? (Hint: Need to solve for Fixed cost) (2 marks)