Question

The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

Exercise 18-3 The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs Total Maintenance Costs Total Machine Hours Month $2,730 January 350 February 3,030 400 March 3,630 550 April 4,530 540 May 3,230 550 June 5,690 750 Detemine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.) Varlable cost per machine hour LINK TO TEXT LINK TO TEXT VIDEO: APPLIED SKILLS Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Total fixed costs LINK TOΤΕXΤ LINK TO TEXT VIDEO APPLIED SKILLS Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Requirement: a Variable cost per unit = Y2-Y1/X2-X1 The Maintenance cost at highest level of Machine hours The Maintenance cost at lowest level of Machine hours The Machine hours at highest level of activity The Machine hours at lowest level of activity (Y2) (Y1) (X2) (X1) 5690 2730 750 350 Y2 - Y1 2960 400 X2 - X1 Variable cost per unit 7.400 Total Fixed cost Y2 - bx2 = Y1 - bx1 b Variable cost Y2 5690 b 7,4 750 X2 Y2 bx2 140 Y1 2730 7.4 X1 350 Y1 - bx1 140 Total Fixed cost 140