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The controller of Hall Industries has collected the following monthly expense data for use in analyzing...

The controller of Hall 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 $6,770 6,300
February 7,720 7,200
March 10,680 10,800
April 13,822 14,220
May 9,100 9,000
June 14,060 14,400

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(a1)

Correct answer. Your answer is correct.
Determine the variable-cost components using the high-low method. (Round variable cost to 2 decimal places e.g. 12.25.)
Variable cost per machine hour $

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(a2)

Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.)
Fixed costs $

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Answer #1

Variable cost = (Cost at highest activity - Cost at lowest activity) /(Highest activity-Lowest activity)

= (14060-6770)/(14400-6300)

= 0.90

Fixed cost = Total cost - Variable cost

= 14060 - (14400*0.90)

= 1100

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