Question

Thornton Computer Services, Inc. has been in business for six months. The following are basic operating data for that period: Month Nov. Dec. 330 $6,000 $6,800 $13,000 $21,000 $16,000 $16,500 Oct. 320 Service hours Revenue Operating costs 120 136 260 420 $4,300 $5,300 7,100 $11,200 9,100 $10,600 Required a. What is the average service revenue per hour in each month and the overall average for the six-month period? c. Determine the average contribution margin per hour fixed cost and the variable cost per hour Complete this question by entering your answers in the tabs below. Required A Required B Required C e the bigh-low method to estimate the total monthly fixed cost and the variable cost.per hour.... per hour per month Fixed cost Required A Required c >

Answer 1

answer

a	Average service revenue per hour
	Formula : Revenue/ Service Hours
		July	Aug.	Sept.	Oct.	Nov.	Dec.	Total
	Service Hours	120	136	260	420	320	330	1586
	Revenue	6000	6800	13000	21000	16000	16500	79300
	Average service Revenue per hour	50	50	50	50	50	50	50
Overall Average for the six month period service Revenue per hour						79300/1586 =	50

b

Month		Operating Cost	Service Hours		Variable Cost
Oct	high	11200	420
July	Low	4300	120
Difference		6900	300	(6900/300)	23

Fixed Cost = Operating Cost in October - (Variable cost per unit * Service   hours in October)

= 11200 -23*420 = 1540

C	Average contribution Margin Per Hour
		July	Aug.	Sept.	Oct.	Nov.	Dec.	Total
	Service Hours	120	136	260	420	320	330	1586
	Revenue	6000	6800	13000	21000	16000	16500	79300
	Variable Cost	2760	3760	5560	9660	7560	9060	38360
	Contribution	3240	3040	7440	11340	8440	7440	40940
	Contribution per hour	27.00	22.35	28.62	27.00	26.38	22.55	25.81