The company leases a machine which calls for a fixed charge plus a fee for each...
The company leases a machine which calls for a fixed charge plus a fee for each hour of usage. In November the company used the machine for 6,917 hours and paid $1,166. In December the company used the machine for 5,183 hours and paid $1,042. How much is the fixed monthly charge?
Homework Answers
Monthly fixed charge = $671.36 or 671
Working
| Cost | No. of activities | ||
| A | High Level | $ 1,166.00 | 6917 |
| B | Low Level | $ 1,042.00 | 5183 |
| C=A-B | Difference | $ 124.00 | 1,734 |
| A | Cost difference | $ 124.00 | |
| B | No. of activities difference | 1734 | |
| C=A/B | Variable cost per unit | $ 0.07 | |
| High Level | Low Level | ||
| A | No. of activities | 6917 | 5183 |
| B | Variable cost per unit | $ 0.0715 | $ 0.0715 |
| C=AxB | Total Variable cost | $ 494.64 | $ 370.64 |
| D | Total cost | $ 1,166.00 | $ 1,042.00 |
| E=D-C | Total fixed cost | $ 671.36 | $ 671.36 |
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