Reference: 18_01
Willco Inc. manufactures electronic parts. They are analyzing their monthly maintenance costs to determine the best way to budget these costs in the future. They have collected the following data for the last six months:
$$\begin{array} { | l | c | c | }
\hline { \text { Month } } & \text { Machine Hours } & \text { Maintenance Costs } \
\hline \text { January } & 30,000 & \$ 62,000 \
\hline \text { February } & 40,000 & \$ 74,500 \
\hline \text { March } & 37,500 & \$ 65,900 \
\hline \text { April } & 39,000 & \$ 68,750 \
\hline \text { May } & 42,300 & \$ 74,000 \
\hline \text { June } & 35,000 & \$ 64,500 \
\hline
\end{array}$$
-Using the high-low method and the Willco data,calculate the variable maintenance cost per machine hour (round to three decimal places).

Question

Reference: 18_01
Willco Inc. manufactures electronic parts. They are analyzing their monthly maintenance costs to determine the best way to budget these costs in the future. They have collected the following data for the last six months:
 $$\begin{array} { | l | c | c | } 
\hline  { \text { Month } } & \text { Machine Hours } & \text { Maintenance Costs } \
\hline \text { January } & 30,000 & \$ 62,000 \
\hline \text { February } & 40,000 & \$ 74,500 \
\hline \text { March } & 37,500 & \$ 65,900 \
\hline \text { April } & 39,000 & \$ 68,750 \
\hline \text { May } & 42,300 & \$ 74,000 \
\hline \text { June } & 35,000 & \$ 64,500 \
\hline
\end{array}$$
-Using the high-low method and the Willco data,calculate the variable maintenance cost per machine hour (round to three decimal places).

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate variable costs. The highest machine hours are in May (42,300 hours, $74,000) and the lowest in January (30,000 hours, $62,000). The variable cost per hour is calculated as: (74,000 - 62,000) / (42,300 - 30,000) = $0.976/hr.

Reference: 18_01 Willco Inc -Using the High-Low Method and the Willco Data,calculate the Variable

Reference: 18_01
Willco Inc -Using the High-Low Method and the Willco Data,calculate the Variable