Question

Calculator High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane hours is the driver total costs of the three resources and the related number of airplane flight hours are as follows: Resource Airplane Flight Hours Total Cost Airplane depreciation: High 44,000 Low $ 18,400,000 $ 18,400,000 28,000 Fuel: High LOW 14,000 28,000 445,896,000 283,752,000 Airplane maintenance High 44,000 Low 16,208,000 12,088,000 28,000 Required: Use the high-low method to answer the following questions. If an answer is zero, enter". If required, round your answers to nearest dollar 1. What is the variable rate for airplane depreciation? per flight hour What is the foxed cost for airplane depreciation? Check My Work 5 more Check My Work uses remaining Previous Email Instructor Save and Exit Submit Assignment for Grading MacBook Pro delete

Answer 1

1) The variable rate for airplane depreciation: The fixed cost for airplane depreciation SO per flight hour $18.400.000 Workings: Use the high-low method = Change in total cost / Change in total hours = ($18.400,000 - $18.400.000)/(44,000 - 28,000) SO Variable cost per hour Fixed cost = Total utility cost - variable cost = $18.400.000 - 50 = $18,400,000 2) Total cost of airplane depreciation = $18.400,000 3) $10,134 per flight hour The variable rate for fuel The fixed cost for fuel Workings: Use the high-low method: = Change in total cost / Change in total hours = ($445,896,000 - $283,752,000)/(44,000 - 28.000) $10,134 Variable cost per hour Fixed cost = Total utility cost - variable cost = $445.896.000 - (44.000 hours * $10.134) SO 4) Total cost of fuel = $10.134 * Number of airplane flight hours The variable rate for airplane maintenance The fixed cost for airplane maintenance $258 per flight hour $4.856,000 Workings: Use the high-low method: = Change in total cost / Change in total hours = ($16,208,000 - $12.088,000)/(44,000 - 28.000) $258 Variable cost per hour Fixed cost = Total utility cost - variable cost = $16,208,000 - (44,000 hours * $258) = $4,856,000 6) $4.856,000 Total cost of airplane maintenance = ($258 * Number of airplane flight hours) Total cost of airplane depreciation Total cost of fuel Total cost of airplane maintenance $18.400.000 $364.824.000 $14,144,000 Workings: Total cost of fuel [36,000 * $10.134] $364.824.000 Total cost of airplane maintenance $14,144,000 [$4,856,000+ $258 * 36,000 hours]