Exercise 18-3 The controller of Norton Industries has collected the following mo

Question

Exercise 18-3 The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs Total Maintenance Costs Month anuary February March April May June $2,600 2,900 3,500 4,400 3,100 5,590 Total Machine Hours 310 360 510 680 510 710 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 hour LINK TO TEXT LINK TO TEXT VIDEO: APPLIED SKILLS Determine the fixed cost components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Total fixed costs g Click if you would like to Show Work for this question Show Wo LINK TO TEXT LINK TO TEXT VIDEO: APPLIED SKILLS

Explanation / Answer

Variable cost per machine hour = Change in cost/Change in machine hour

                                               = (5590-2600)/(710-310)

Variable cost per machine hour = 7.475 per machine hour

Fixed cost = Total cost-Variable cost

                = 5590-(710*7.475)

Fixed cost = 282.75

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