Exercise 5-3 The controller of Norton Industries has collected the following mon

Question

Exercise 5-3 The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Total Machine Hours Month January February March April May June Total Maintenance Costs $2,560 2,860 3,460 4,360 3,060 5,530 330 380 530 660 530 730 Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.) Variable cost per machine hours Determine the fixed cost components using the high-low method. (Round answer to o decimal places e.g. 2,520.) Total fixed costs

Explanation / Answer

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(5530-2560)/(730-330)

=$7.425 per machine hour

Total fixed costs=5530-(730*7.425)

=$110(Approx),

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