Question

Calculate High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for curred in on. The resources are airplane erection for m ance. There w the river. The total of the the r e and theredumber of hours are and h o Resource Airplane Flight Hours Total Cost Airplane depreciation: High 44,000 25,000 $18.400,000 $ 18,400,000 High 445 .000 44,000 28.000 283,752 000 High 44,000 16,200,000 LOW 28.000 12,080,000 Required: stores 1. What is the variable rate for airplane depreciation? Check My Work or Check My Wo g All worked Emal structor Save and to submit Assignment for Grading

Answer 1

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Fly High
High Low method
Variable cost=	(Highest activity cost- Lowest activity cost)/ (Highest activity units- Lowest activity units)
For depreciation:
Fixed cost	18,400,000.00
Answer 1
Cost is same for both hours so variable cost of depreciation is zero.
Fixed cost for airplane depreciation is $ 18,400,000.
Answer 2
Total cost of airplane depreciation is $ 18,400,000.

For Fuel:
	Cost	Hours
Highest activity	445,896,000.00	44,000.00
Lowest activity	283,752,000.00	28,000.00
Difference	162,144,000.00	16,000.00
Variable cost	10,134.00
Fixed cost	Highest activity cost- (Highest units * Variable cost per unit)
Fixed cost	445896000-(44000*10134)
Fixed cost	-
Answer 3
Variable cost rate for fuel is $ 10,134 per flight hour.
Fixed cost for fuel is $ 0.
Answer 4
Total cost of fuel is $ 10,134* Number of airplane flight hours.

For maintenance:
	Cost	Hours
Highest activity	16,208,000.00	44,000.00
Lowest activity	12,088,000.00	28,000.00
Difference	4,120,000.00	16,000.00
Variable cost per time	258.00
Fixed cost	Highest activity cost- (Highest units * Variable cost per unit)
Fixed cost	16208000-(4400*258)
Fixed cost	15,072,800.00
Answer 5
Variable cost rate for airplane maintenance is $ 258 per flight hour.
Fixed cost for airplane maintenance is $ 15,072,800.
Answer 6
Cost formula is: $ 15,072,800+ $ 258* number of airplane flight hours.

Answer 7	For 36,000 hours
Cost of airplane depreciation	18,400,000.00
Cost of fuel	364,824,000.00
Cost of airplane maintenance
Fixed	15,072,800.00
Variable	9,288,000.00	This is $ 258* 36,000 hours.
Total Cost of airplane maintenance	24,360,800.00