Franklin Computer Services, Inc. has been in business for six months. The follow

Question

Franklin Computer Services, Inc. has been in business for six months. The following are basic operating data for that period:

Required

What is the average service revenue per hour in each month and the overall average for the six-month period?

Use the high-low method to estimate the total monthly fixed cost and the variable cost per hour.

Determine the average contribution margin per hour.

Month July Aug. Sept. Oct. Nov. Dec. Service hours 118 134 262 420 322 328 Revenue $ 6,254 $ 7,102 $ 13,886 $ 22,260 $ 17,066 $ 17,384 Operating costs $ 4,260 $ 5,260 $ 7,150 $ 11,100 $ 9,130 $ 10,530

Explanation / Answer

Requirement 1 Month July Aug. Sept. Oct. Nov. Dec. Average Service hours A 118 134 262 420 322 328 264 Revenue B $ 6,254 $ 7,102 $ 13,886 $ 22,260 $ 17,066 $ 17,384 13,992 Average service revenue Per Hour C= B/A $ 53 $ 53 $ 53 $ 53 $ 53 $ 53 Overall average revenue per hour for the six month period 53 Requirement 2 using High -Low Method Variable cost Per hour = (11,100-4,260) /(420-118) Variable cost Per hour = 22.65 Per Unit Total Monthly fixed cost = 11100-(420X22.65) Total Monthly fixed cost = $1,587 Requirement 3 Per hour Average service revenue Per Hour 53.00 Variable cost Per hour 22.65 Average contribution per hour 30.35

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.