Respuesta :
Answer:
(a) The variable-cost components using the high-low method is $0.37.
(b) The fixed-cost components using the high-low method is $1,442.97.
Explanation:
Note: This question is not complete and the data in its are merged together. The complete question with the sorted data is therefore presented before answering the question as follows:
The controller of Sandhill Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
Month Total Maintenance Costs Total Machine Hours
January $2,880 3,820
February 3,273 4,364
March 3,928 6,546
April 4,632 8,619
May 3,491 5,455
June 4,844 8,730
(a) Determine the variable-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.)
(b) Determine the fixed-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.)
The explanation of the answer is now given as follows:
(a) Determine the variable-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.)
From the data given, the highest Total Maintenance Costs and Total Machine Hours in April, while the lowest are in January. Therefore, we have:
Variable cost per hour = (Highest Total Maintenance Costs - Lowest Total Maintenance Costs) / (Highest Total Machine Hours - Lowest Total Machine Hours = ($4,632 - $2,880) / (8,619 - 3,820) = $1,752 / 4,799 = 0.365076057511982
Rounding to 2 decimal places as required, we have:
Variable cost per hour = $0.37
Therefore, the variable-cost components using the high-low method is $0.37.
(b) Determine the fixed-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.)
Total cost = Total Fixed Cost + Total Variable Cost ................. (1)
Where;
Total Variable Cost = Variable cost per hour * Hours at a particular Total Maintenance Costs
Using highest levels of activity and substitute into equation (1), we have:
$4,632 = Total Fixed Cost - ($0.37 * 8,619)
Total Fixed Cost = $4,632 - ($0.37 * 8,619) = $4,632 - $3,189.03 = $1,442.97
Therefore, the fixed-cost components using the high-low method is $1,442.97.
