| 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 | ||||
| $8,100 – $3,600 | ||
| Variable costs = | = $250 per maintenance hour | |
| 24 – 6 |
| Using the low point, $3,600 = ($250/maint. hr. × 6 maint. hrs.) + fixed cost. |
| Therefore, fixed cost = $2,100 |
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