Question

xercise 11-3 The controller of Norton 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 $2,700 300 February 3,000 350 March 3,600 500 April 4,500 690 May 3,200 500 June 5,500 700 Determine the variable cost components using the high-low method. (Round variable cost to 2 decimal places e.g. 12.25.) Variable cost per machine hour $ LINK TO TEXT LINK TO TEXT Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Total fixed costs $

Answer 1

Variable per hour is $7

total variable costs for 700 hours=$4900

Fixed costs is $600

Step-by-step explanation:

Under the high-low method,variable cost formula is as stated below

variable cost=highest maintenance cost-lowest maintenance/machine hours at highest maintenance cost-machine hours at the lowest maintenance cost

highest maintenance cost is $5500

lowest maintenance is $2700

machine hours at highest maintenance cost is 700 hours

machine hours at lowest maintenance cost is 300 hours

variable cost=($5500-$2700)/(700-300)

variable cost=$7

Fixed cost=total cost-total variable cost

total variable cost for 700 hours =$7*700=$4,900

Fixed cost=$5,500-$4900

fixed cost=$600