The following information is available for a company’s maintenance cost over the last seven months. Month Maintenance Hours Maintenance Cost
June 9 $5,450
July 18 6,900
August 12 5,100
September 15 6,000
October 21 6,900
November 24 8,100
December 6 3,600
Using the high-low method, estimate both the fixed and variable components of its maintenance cost.
High-Low method - Calculation of variable cost per maintenance hour
Total cost at the high point
Variable costs at the high point:
Volume at the high point:
Variable cost per maintenance hour
Total variable costs at the high point
Total fixed costs
Total cost at the low point
Variable costs at the low point:
Volume at the low point:
Variable cost per maintenance hour
Total variable costs at the low point
Total fixed costs