Sydney Company makes weather balloons. The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory. Data for the past six months were collected.
Maintenance Machine
Month cost hours
January $10,120 526
February 9,560 389
March 9,712 412
April 10,460 569
May 10,226 541
June 9,686 399
Required:
A. Using the high low method, calculate the fixed cost of maintenance and the variable rate per machine hour.
B. Using the high low method, construct the cost formula for the total maintenance cost.
C. Calculate the budgeted cost for maintenance assuming that 700 hours are worked next month.

Question

Quizplus · Accepted Answer

The Answer of Sydney Company makes weather balloons. The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory. Data for the past six months were collected.
Maintenance Machine
Month cost hours
January $10,120 526
February 9,560 389
March 9,712 412
April 10,460 569
May 10,226 541
June 9,686 399
Required:
A. Using the high low method, calculate the fixed cost of maintenance and the variable rate per machine hour.
B. Using the high low method, construct the cost formula for the total maintenance cost.
C. Calculate the budgeted cost for maintenance assuming that 700 hours are worked next month.

Sydney Company Makes Weather Balloons