Slonaker Inc has provided the following data concerning its

Slonaker Inc. has provided the following data concerning its maintenance costs:

Management believes that maintenance cost is a mixed cost that depends on machine-hours.

Required:

Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method. (Round your answers to 2 decimal places. Omit the \"$\" sign in your response.)

	Machine-Hours	Maintenance Cost
April	5,799	$30,379
May	5,782	$30,289
June	5,764	$30,237
July	5,761	$30,233
August	5,717	$30,078
September	5,795	$30,360
October	5,809	$30,388
November	5,801	$30,378
December	5,785	$30,318

Solution

Variable Cost per machine hour = 3.37 Fixed Cost = 10,811.67 Machine-Hours Maintenance Cost High 5809 $         30,388 Low 5717 $         30,078 Change 92 $               310 Variable Cost = Change in Cost / Change in Activity = $310 / 92 = $              3.37 per machine hour Fixed Cost element = Total Cost - Variable Cost element = $30,388 - ($3.37 X 5,809) = $   10,811.67 Alternatively, Fixed cost = $30,078 - ($3.37 X 5,717) = $   10,811.71