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

Question

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

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.)

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        

Explanation / Answer

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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