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 Total Month Maintenance Costs Machine Hours January February March April May June $2,630 2,930 3,530 4,430 3,130 5,550 340 390 540 650 540 740 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

Explanation / Answer

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

=(5550-2630)/(740-340)=$7.3/machine hour

Total fixed cost=5550-(7.3*740)=$148

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