Question

Slonaker Inc. has provided the following data concerning its maintenance costs: Machine-Hours Maintenance Cost   April 5,799...

Slonaker Inc. has provided the following data concerning its maintenance costs:

Machine-Hours Maintenance
Cost
  April 5,799           $30,379        
  May 5,782           $30,289        
  June 5,764           $30,237        
  July 5,761           $30,233        
  August 5,717           $30,078        
  September 5,795           $30,360        
  October 5,809           $30,388        
  November 5,801           $30,378        
  December 5,785           $30,318        

Management believes that maintenance cost is a mixed cost that depends on machine-hours.

Required:

Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
Business   Accounting   
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Homework Answers

Answer #1
Variable Cost per machine hour = 3.37
Fixed Cost = 10,811.67
Machine-Hours Maintenance Cost
High 5809 $         30,388
Low 5717 $         30,078
Change 92 $               310
Variable Cost = Change in Cost / Change in Activity
= $310 / 92
= $              3.37 per machine hour
Fixed Cost element = Total Cost - Variable Cost element
= $30,388 - ($3.37 X 5,809)
= $   10,811.67
Alternatively, Fixed cost = $30,078 - ($3.37 X 5,717)
= $   10,811.71
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