Skip to main content

Use the high-low method to answer the following questions. If an answer is zero, enter "0". 1.  What is the variable rate for airplane depreciation? $per flight hour What is the fixed cost for airplane depreciation? $ 2.  What is the cost formula for airplane depreciation? Total cost of airplane depreciation = $ 3.  What is the variable rate for fuel? $ per flight hour What is the fixed cost for fuel? $ 4.  What is the cost formula for fuel? Total cost of fuel = $ x   5.  What is the variable rate for airplane maintenance? $ per flight hour What is the fixed cost for airplane maintenance? $ 6.  What is the cost formula for airplane maintenance? Total cost of airplane maintenance = $ + ( $ ×   ) 7.  Using the three cost formulas that you developed, predict the cost of each resource in a month with 36,000 airplane flight hours. Total cost of airplane depreciation $ Total cost of fuel $ Total cost of airplane maintenance $

Question
100%
  1. High-Low Method, Cost Formulas

    During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:

    Resource Airplane Flight Hours Total Cost
    Airplane depreciation:    
    High 44,000          $ 18,000,000
    Low 28,000          18,000,000
    Fuel:    
    High 44,000          445,896,000
    Low 28,000          283,752,000
    Airplane maintenance:    
    High 44,000          15,792,000
    Low 28,000          11,504,000

    Required:

    Use the high-low method to answer the following questions. If an answer is zero, enter "0".

    1.  What is the variable rate for airplane depreciation?
    $per flight hour

    What is the fixed cost for airplane depreciation?
    $

    2.  What is the cost formula for airplane depreciation?

    Total cost of airplane depreciation = $

    3.  What is the variable rate for fuel?
    $ per flight hour

    What is the fixed cost for fuel?
    $

    4.  What is the cost formula for fuel?

    Total cost of fuel = $ x  

    5.  What is the variable rate for airplane maintenance?
    $ per flight hour

    What is the fixed cost for airplane maintenance?
    $

    6.  What is the cost formula for airplane maintenance?

    Total cost of airplane maintenance = $ + ( $ ×   )

    7.  Using the three cost formulas that you developed, predict the cost of each resource in a month with 36,000 airplane flight hours.

    Total cost of airplane depreciation $
    Total cost of fuel $
    Total cost of airplane maintenance $
  2.  
  3.  
Check My Work
Expert Solution

Want to see the full answer?

Check out a sample Q&A here
Blurred answer
Students who’ve seen this question also like:
Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
Not helpful? See similar books
Managerial Accounting: The Cornerstone of Business Decision-Making
Similar questions
To this solution
marketing sidebar icon
Want to see this answer and more?
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: e. What is the net cost of the new equipment? (Include the inflow from the sale of the old…

A: Working:-   a.           %     Depreciation Depreciation Annual Year Base   Depreciation…

Q: At times firms will need to decide if they want to continue to use their current equipment or…

A: Net Present Value of the project is calculated in the excel as below. It is calculated as per the…

Q: a. Determine if it is viable to recycle and use the products from the given information. a. Yes,…

A: Click to see the answer

Q: a. Determine if it is viable to recycle and use the products from the given information. a. Yes,…

A: Click to see the answer

Q: At times firms will need to decide if they want to continue to use their current equipment or…

A: With regards to Investment examination, it tends to be exceptionally advantageous to realize how to…

Q: A project has a unit price of $5,000, a variable cost per unit of $4,000, fixed costs of…

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: Which of the following statements is/are correct? L The cost of the survey (E150,000), the cost of…

A: Relevant cash flows are those cash flows which are impacted by the acceptance or rejection of an…

Q: Define each of the costs below as either sunk, opportunity, cash, or book: (a) Amount you could have…

A: Definition : 1. Sunk costs   The expenditures that a company has already made and cannot be…

Q: At times firms will need to decide if they want to continue to use their current equipment or…

A: Calculation of net present value calculated in next step

Q: ABC Corp is considering replacing equipment that originally cost $600,000 and has accumulated…

A: sunk cost: formula =originally cost - accumulated depreciation - Amount Recovered on sale

Q: Delaney Company is considering replacing equipment which originally cost $508,000 and which has…

A: Sunk cost is the cost which is already incurred and it is not relevant for decision making. Examples…

Q: Delaney Company is considering replacing equipment that originally cost $519,000 and that has…

A: A sunk cost means cost that is incurred by the businesses in past but this cost cannot be recovered…

Q: E & A Construction must replace a piece of heavy earth moving equipment. Information concerning the…

A: Incremental IRR is the rate at which the incremental outflows of the projects is equal to the…

Q: To recover the waste heat from the processed fluid, a chemical industry planned to invest in a heat…

A: a. Calculate Incremental investment returns. Suggestion: Heat Exchanger 1 should be purchased as it…

Q: What are the annual sales for the new portable camper? (Do not round intermediate calculations and…

A: Annual sales for the new portable camper = Sales units* Selling Price per unit  Annual increased…

Q: Otis Company is considering replacing equipment which originally cost P500,000 and which has…

A: Sunk cost is a cost which was already incurred and does not affect the decision making. In the above…

Q: Hi please give step by step instructions to figure out the problem and give me an answer to see if…

A: a. Prepare a differential analysis:The company should replace the old machine as the loss incurred…

Q: Consider each of the following projects: Accounting Project Break-Even 115,800 114,000 5,340 Unit…

A: Given,  The projects A Project B Project Z

Q: Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt…

A: Net present value (NPV) is the contrast between the present value of money inflows over some…

Q: PQR Ltd. is considering an equipment of $1,680,000, has a life of six year, and depreciation is…

A: When there is a worst case, The sale price of the unit will decrease and the cost of the unit will…

Q: The purchased and installation costs of some pieces of equipment are given as a function of weight…

A: Capital investment refers to the process of putting money in the business specially in fixed assets…

Q: Direction: Solve the following problems completely. For problem 1 and 2, please refer to the given…

A: NOTE : As per BARTLEBY guidelines, when multiple questions are given then first question is to be…

Q: There are two MEA machines that you are evaluating: Machine A has a lifetime of 6, an initial cost…

A: The maximum annual cost of a machine represents the maximum cost incurred annually on an asset of a…

Q: A firm is evaluating an investment in a fixed asset that costs $1,080, has a six-year life, and has…

A: Net Present Value: This is the present worth of the future cash flows calculated using the discount…

Q: PQR Ltd. is considering an equipment of $1,680,000, has a life of six year, and depreciation is…

A: Net present value is the difference between present value of cash inflows and initial cost. It shows…

Q: A company needs a CNC machine. One of four alternative CNC machines will be selected. Machines have…

A: In this we will calculate equivalent annual cost that is only suitable for comparison.

Q: 3. A manufacturer is considering incurring S60,000 in research and development costs in order to…

A: Click to see the answer

Q: Calculate the profitability of the following proposal using Return on investment method Proposal I…

A: Net income = sales - material - labor cost - variable overhead =160000 - 60000 - 22000 - 14000 =…

Q: Suppose that depreciation expense is 3.000.000 TL and profit is 15.000.000 TL. Contribution margin…

A: Margin of safety shows the profit earned after the safety point (break even sales). It is calculated…

Q: An auto repair company needs a new machine that will check for defective sensors. The machine has an…

A: Net Operating Income = $120,000 - $50,000 Net Operating Income = $70,000

Q: If a dump truck for hauling coal has an estimated net cost of $90,000 and is expected to give…

A: Depreciation:   Depreciation refers to the reduction in the monetary value of a fixed asset due…

Q: Brandt Enterprises is considering a new project that has an estimated NPV of $800. The assistant to…

A: Change in sales Price Let's tabulate the data for better understanding   From Above graph, we…

Q: The cost of a high-quality 250-horsepower compressor was $9500 when recently purchased. What would a…

A: Click to see the answer

Q: Use the information provided below to answer the following questions: 3.1 Calculate the total…

A: As per Bartleby policy we are allowed to do only one question in case of Multiple Question. And If…

Q: YEAR CONVEYOR FORKLIFT (S150,000) (S60,000) (33,000) (48,000) 2 (33,000) (48,000) 3 (33,000)…

A: a. Calculation of IRR of each alternative is not possible to calculate because the cash inflow is…

Q: Peabody Corporation has the following base-case estimates for its new small engine assembly…

A: "Since you have posted the question which is quite lengthy to solve it in detail and step-by-step…

Q: The value of a certain car aftert years is modeled by the expression 15,000(0.7. What are the…

A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…

Q: Calculate the profitability of the following proposal using Returni on investr Proposal I Automatic…

A: Return on investment can be calculated by using this equation Return on investment =Profitablity…

Q: A company planning to market a new model of motor scooter analyzes the effect of changes in the…

A: Breakeven point :- Breakeven point means when Cost of production plus fixed expense or total…

Q: Yıldız Processing Technologies Company wants to buy lathe in order to meet their increasing…

A: Given that,  Annual operating expenses = 3000 Cost of capital = 10%  Economic life = 4 years.

Q: Yıldız Processing Technologies Company wants to buy lathe in order to meet their increasing…

A: FV is the value of any asset or cash after a specified period of time in the future as per the…

Q: Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt…

A: NPV is used to calculate the net present worth of the entire project which a company wants to start.

Q: Starling Co. is considering disposing of a machine with a book value of $22,200 and estimated…

A: Cost savings per year = 23,400 - 19,900 = 3,500 For 5 years = 3,500 x 5 = $17,500 Old machine sale…

Q: BH is considering the manufacture of a new product which requires the use of both a new machine and…

A: Relevant Cost: It  is a  differential cost that differs  between projects  that  is  being…

Q: lentiful Products is analyzing a proposed project with expected sales of 6300 units +-5%. The…

A: Sales revenue refers to the total money generated from selling a product. All the deductions are…

Q: You are asked to select the best purchase option: there are two machines. You are only given data on…

A: Machine A Computation of Net Present Value Year Cash Flow PV factor PresentValue 1 15000…

Q: A company is considering replacing an old piece of industrial equipment to reduce operating and…

A: Click to see the answer

Q: Samreen Inc.,has some material that originally cost $73,500. The material has a scrap value of…

A: Incremental revenue refers to the extra revenue earned from selling the additional unit or adding…

Q: Samreen Inc.,has some material that originally cost $73,500. The material has a scrap value of…

A: We shall consider the rework cost and also the additional revenue due to rework to ascertain the…

Q: Starling Co. is considering disposing of a machine with a book value of $24,500 and estimated…

A: Click to see the answer

Knowledge Booster
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Resource Airplane Flight Hours Total Cost Airplane depreciation:     High 44,000          $ 18,000,000 Low 28,000          18,000,000 Fuel:     High 44,000          445,896,000 Low 28,000          283,752,000 Airplane maintenance:     High 44,000          15,792,000 Low 28,000          11,504,000   Required: Use the high-low method to answer the following questions. If an answer is zero, enter "0". 1.  What is the variable rate for airplane depreciation?$fill in the blank 1per flight hour What is the fixed cost for airplane depreciation?$fill in the blank 2 2.  What is the cost formula for…
    High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Resource Airplane FlightHours Total Cost Airplane depreciation:           High 44,000     $ 18,400,000   Low 28,000     $ 18,400,000   Fuel:           High 44,000     445,896,000   Low 28,000     283,752,000   Airplane maintenance:           High 44,000     16,656,000   Low 28,000     12,448,000   Required: Use the high-low method to answer the following questions. If an answer is zero, enter "0". If required, round your answers to nearest dollar. 1.  What is the variable rate for airplane depreciation?$per flight hour What is the fixed cost for airplane depreciation?$ 2.  What is the cost…
    Assigning Costs to Activities, Resource Drivers The Receiving Department has three activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for $21,000 per year. The forklift is used only for unloading. The fuel for the forklift is $3,700 per year. Other operating costs (maintenance) for the forklift total $1,500 per year. Inspection uses some special testing equipment that has depreciation of $1,750 per year and an operating cost of $1,750. Receiving has three employees who have an average salary of $50,000 per year. The work distribution matrix for the receiving personnel is as follows: Activity Percentage of Time on Each Activity Unloading 40% Counting 25% Inspecting 35% No other resources are used for these activities. Required: 1. Calculate the cost of each activity. Unloading $fill in the blank 1 Counting $fill in the blank 2 Inspecting $fill in the blank 3 2. Explain the two methods used to assign costs to activities.…
  • Assigning Costs to Activities, Resource Drivers The receiving department has three activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $3,600 per year. Other operating costs (maintenance) for the forklift total $1,500 per year. Inspection uses some special testing equipment that has depreciation of $1,200 per year and an operating cost of $750. Receiving has three employees who have an average salary of $50,000 per year. The work distribution matrix for the receiving personnel is as follows: Activity Percentage of Time on Each Activity Unloading 40% Counting 25 Inspecting 35 No other resources are used for these activities. Required: 1.  Calculate the cost of each activity. Unloading $fill in the blank 1 Counting $fill in the blank 2 Inspecting $fill in the blank 3 2. Explain the two methods used to assign costs to activities.
    High-Low Method for Service Company Miss River Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Miss River Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.   Transportation Costs Gross-Ton Miles January $1,346,500       347,000     February 1,501,300       388,000     March 1,061,000       251,000     April 1,439,400       375,000     May 1,207,200       302,000     June 1,547,700       408,000     Determine the variable cost per gross-ton mile and the fixed cost. Round variable cost per unit to the nearest cent. Variable cost $fill in the blank 1 per gross-ton mile Fixed cost $fill in the blank 2
    2. The following data pertains to activity and maintenance costs for two recent years: Year 1 Year 2 Activity in Units 500 400 Maintenance Costs $15,000 $13,000 Using the high-low method, the cost formula for maintenance would be:
  • High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved.
    Miss River Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Miss River Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.   Transportation Costs Gross-Ton Miles January $6,500,000 2,500,000           February 6,187,500 2,250,000           March 6,980,000 2,940,000           April 7,500,000 3,400,000           May 8,775,000 4,500,000           June 8,200,000 4,000,000           Determine the variable cost per gross-ton mile and the fixed costs. Round variable cost per unit to the nearest cent. Variable cost $ per gross-ton mile Fixed cost $
    Using the highest and lowest levels of activity for the past year, the cost function representing maintenance costs (y) as a function of machine hours (x) was developed: y=439,000 + 14x. The lowest level of machine hours last year was 4000. The maintenance cost incurred at the highest and lowest level of machine hours were P551,000 and P495,000, respectively. If 5975 machine hours were used the following month, what amount maintenance cost can the company expect? a. 439,000b. 495,000c. 551,000d. 522,650
  • Estimating a cost function, high-low method. Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip. Using the high-low method, estimate the linear relationship y = a + bX , where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year. Give examples of costs that would be included in a and in b . 3. If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?
    Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved.   Transportation Costs Gross-Ton Miles January $1,776,000   560,000   February 2,700,000   1,000,000   March 1,650,000   500,000   April 1,860,000   600,000   May 1,440,000   400,000   June 1,566,000   460,000   Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (If required, round to two decimal places.) $fill in the blank 1 per gross-ton mile Total fixed cost $fill in the blank 2
    Recommended textbooks for you
  • Managerial Accounting: The Cornerstone of Busines...
    Accounting
    ISBN:9781337115773
    Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
    Publisher:Cengage Learning
    Cornerstones of Cost Management (Cornerstones Ser...
    Accounting
    ISBN:9781305970663
    Author:Don R. Hansen, Maryanne M. Mowen
    Publisher:Cengage Learning
    College Accounting, Chapters 1-27
    Accounting
    ISBN:9781337794756
    Author:HEINTZ, James A.
    Publisher:Cengage Learning,
  • Financial And Managerial Accounting
    Accounting
    ISBN:9781337902663
    Author:WARREN, Carl S.
    Publisher:Cengage Learning,
    Managerial Accounting
    Accounting
    ISBN:9781337912020
    Author:Carl Warren, Ph.d. Cma William B. Tayler
    Publisher:South-Western College Pub
    Financial Accounting Intro Concepts Meth/Uses
    Finance
    ISBN:9781285595047
    Author:Weil
    Publisher:Cengage
  • Managerial Accounting: The Cornerstone of Busines...
    Accounting
    ISBN:9781337115773
    Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
    Publisher:Cengage Learning
    Cornerstones of Cost Management (Cornerstones Ser...
    Accounting
    ISBN:9781305970663
    Author:Don R. Hansen, Maryanne M. Mowen
    Publisher:Cengage Learning
    College Accounting, Chapters 1-27
    Accounting
    ISBN:9781337794756
    Author:HEINTZ, James A.
    Publisher:Cengage Learning,
    Financial And Managerial Accounting
    Accounting
    ISBN:9781337902663
    Author:WARREN, Carl S.
    Publisher:Cengage Learning,
    Managerial Accounting
    Accounting
    ISBN:9781337912020
    Author:Carl Warren, Ph.d. Cma William B. Tayler
    Publisher:South-Western College Pub
    Financial Accounting Intro Concepts Meth/Uses
    Finance
    ISBN:9781285595047
    Author:Weil
    Publisher:Cengage