Question

The following information is available for a company's maintenance cost over the last seven months. Month June July August September October November December Units Produced 90 180 120 150 210 240 Maintenance Cost $5,450 6,900 5, 100 6,000 6,900 8, 100 3,600 60 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. Change in cost Change in volume High-Low method - Calculation of variable cost per maintenance hour Cost at high point minus cost at low point $ 4,500 Variable cost per unit produced Volume at high point minus volume at low point [ 180 $ 25.00

Answer 1

High-Low Method - Calculation of Variable Cost per maintenance hour Cost at high point minus cost at low point 4,500 Variable cost per unit produced Volume at high point minus volume at low point 1801 $ Change in cost Change in volume 25.00 8,100 240 Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Totalfixed costs 25.00 6,000 2,100 $ 3,600 Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit produced Total variable costs at the low point Total fixed costs 25.00 1,500 2,100