The controller of Gutierrez Industries has collected the
following monthly expense data for use in analyzing the cost
behaviour of maintenance costs:
Month | Total Maintenance Costs |
Total Machine Hours |
|||||
January | $2,740 | 3,000 | |||||
February | 3,150 | 4,050 | |||||
March | 3,950 | 6,150 | |||||
April | 4,570 | 8,200 | |||||
May | 3,290 | 5,500 | |||||
June | 5,178 | 8,300 |
Determine the variable-cost component using the high-low method.
(Round answer to 2 decimal places e.g.
12.25.)
Variable cost | $ | per machine hour |
Determine the fixed cost component using the high-low
method.
Fixed cost | $ |
Determine the fixed cost component using the high-low
method.
Fixed cost | $ |
Calculation of Variable cost using High-low method :
Variable cost per machine hour :
=(Highest maintenance cost - Lowest maintenance cost) /(Highest machine hrs - Lowest machine hrs)
=(5178-2740)/(8300-3000)
=0.46 per machine hour
Calculation of fixed Cost :
Fixed cost = Highest maintenance cost - (Highest machine hrs x Variable cost per machine hour)
=5178-(8300x0.46)
=1,360
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The controller of Gutierrez Industries has collected the following monthly expense data for use in analyzing...
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