Question

B. Fixed cost C. Incremental cost D. Variable cost E Product cost ures electronic parts. They are analyzing their monthly maintenance costs to of these costs in the future. They have collected the following data for the last Maintenance Costs $62,000 $74,500 565,900 $68,750 $74,000 564,500 late the variable maintenance cost per machine 3. & 4. Willco Inc, manufactures electronic po determine the best way to budget these costs in six months Month Machine Hours January 30,000 February 40.000 March 37.500 April 39,000 May 42,300 June 35.000 3. Using the high-low method and the Willco data, calculate the variable maintenance hour (round to three decimal places). A. $1.0250/hr. B. $0.9756/hr. C. $1.8630/hr D. $1.2500/hr. E. $0.8000/hr. 4. Using the high-low method and the Willco data above, what is the approximate fixed cost component on the monthly maintenance costs? A. $30,642 B. $24,500 C. $32,732 D. $31.250

Answer 1

3.

High low method = $74,000 - 62,000 / 42,300 - 30,000

Variable cost per machine hour = $12,000 / 12,300 = $0.9756 per hour

Hence option B is correct.

4.

Fixed cost = $74,000 - $41,268  (42,300*$0.9756) = $32,732

Hence option C. is correct.