In: Accounting
For the past 8 months: | Machine-Hours | Maintenance Cost | This is all the given info!! | |||||
March | 4,440 | $50,950 | ||||||
April | 4,431 | $50,877 | ||||||
May | 4,412 | $50,696 | ||||||
June | 4,460 | $51,113 | ||||||
July | 4,414 | $50,711 | ||||||
August | 4,433 | $50,900 | ||||||
September | 4,443 | $50,976 | ||||||
October | 4,415 | $50,730 | ||||||
November | 4,391 | $50,530 | ||||||
Management believes that maintenance cost is a mixed cost that depends on machine-hours | ||||||||
Using the high-low method, calculate | ||||||||
(a) Variable cost per machine-hour | ||||||||
(b) Fixed cost per month | ||||||||
(c) What would total costs be for a month with 4,000 machine-hours? |
Month | Hours | Cost | |
March | $ 4,440 | $ 50,950 | |
April | $ 4,431 | $ 50,877 | |
May | $ 4,412 | $ 50,696 | |
June | $ 4,460 | $ 51,113 | |
July | $ 4,414 | $ 50,711 | |
August | $ 4,433 | $ 50,900 | |
September | $ 4,443 | $ 50,976 | |
October | $ 4,415 | $ 50,730 | |
November | $ 4,391 | $ 50,530 | |
High | $ 4,460 | $ 51,113 | |
Low | $ 4,391 | $ 50,530 | |
Variable cost | $ 8.4493 | ||
= (51113-50530)/(4460-4391) | |||
Fixed cost | $ 13,429 | ||
= 51113-4460 × 8.45 | |||
Equation= | Cost = 8.4493 × Hours + 13429.23 | ||
Cost at 4000 hours: | $ 47,226.33 | ||
[ 4000 * 8.4493 + 13429.23 |
Please rate.