Question

Finch Computer Services, Inc. has been in business for six months. The following are basic operating data for that period Month July 114 Aug. Sept Oct. Nov. Dec. Service hours Revenue Operating costs 328 $6,270 $7,370 $14,190 $23,540 $17,600 $18,040 $4,260 $5,280 7,170 $11,170 9,150 $10,550 134 258 428 320 Required a. What is the average service revenue per hour in each month and the overall average for the six-month period? b. Use the high-low method to estimate the total monthly fixed cost and the variable cost per hour c. Determine the average contribution margin per hour. Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the average service revenue per hour in each month and the overall average for the six-month period? Month July Aug Sept. Oct. Nov Dec. Total Average Average service revenue per hour

Answer 1

A. Calculation of average revenue per hour :

Average revenue per hour = Revenue/ Service Hours

	July	August	September	October	November	December	Total
Revenue	6270	7370	14190	23540	17600	18040	87010
Service Hours	114	134	258	428	320	328	1582
Average service revenue per hour	55	55	55	55	55	55	55

B. Using High Low Method Monthly Fix Cost & Variable Cost calculation :-

Month		Operating Cost	Service Hours		Variable Cost
Oct	high	11170	428
July	Low	4260	114
Difference		6910	314	(6910/314)	22.00

Fixed Cost = Operating Cost in October - (Variable cost per unit * Service   hours in October)

= 11170 - (428*22.00)

= 11170-9416 = 1754

Therefore, Monthly Fix Cost = $1754  

Variable Cost Per Hour = $22.00

C. Average Contribution margin per hour

Particulars	Amount
Average Revenue per hour(As Calculate in	55
(Less)Variable cost per hour	22
Average Contribution margin per hour	33