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