Question

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?

Answer 1

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

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