Recent maintenance costs of Gallander Corporation are listed

Recent maintenance costs of Gallander Corporation are listed below Machine-Hours Maintenance Costs April June July August.. September.... October.... November … . … 727 725 720 641 671 728 710 707 $7,269 $7,290 $7,273 $7,130 $7,208 $7,291 $7,260 $7,231 Management believes that maintenance cost is a mixed cost that depends on machine-hours Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to O $10.30 O s190 O $185 O $167

Solution

Solution:- C. $1.85

167

Calculation of Variable cost per machine hour:

Variable Cost per machine hour = Change in maintenance costs ÷ Change in hours

= 161 ÷ 87

= $1.850

Therefore the variable component of maintenance cost per machine hour is closest to $1.85

	Machine hours	Maintenance Costs
Highest Point - September	728	7291
Lowest Point - July	641	7130
Change in machine hours and maintenance costs	87	167