Question

The controller of Carla Vista Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

Month		Total Maintenance Costs			Total Machine Hours
January		$2,630			350
February		2,930			400
March		3,530			550
April		4,430			640
May		3,130			550
June		5,230			750

Determine the variable cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.)

Variable cost per machine hour

$enter the variable cost per machine hour in dollars rounded to 2 decimal places

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Determine the fixed cost components using the high-low method.

Total fixed costs

$enter the total fixed costs in dollars

Answer 1

Estimate the costs with High-Low Method Maintenance Month Machine hours costs High level of Activity June 750 5230 low level of Activity January 3501 2630 Difference 400 2600 Answers: Varaible cost Per Machine hour (2600/400) 6.50 PerMH Fixed Cost (5230-(750*6.50)) 355 Per Month Variable Cost = Differece in cost / Difference in Units Fixedcost = total Cost Cost-(Units *Variable Cost) Cost Equation = Fixed Cost +(hours *Varaible cost Per MH)