Question

Determine fixed and variable costs using the high-low method

The controller of Billings Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

Month

Total Maintenance Costs

Total Machine Hours
January

$2,800

3,000
February

3,000

4,000
March

3,600

6,000
April

4,500

7,900
May

3,200

5,000
June

5,000

8,000

Determine fixed and variable costs using the high-low method and prepare graph.
(SO 1, 3)
Instructions

(a)

Determine the fixed and variable cost components using the high-low method.
(b)

Prepare a graph showing the behavior of maintenance costs, and identify the fixed and variable cost elements. Use 2,000-hour increments and $1,000 cost increments.

Solutions

Expert Solution
No answers


Submit Your Answer