Concept explainers
The controller of Norton Industries has collected 6the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
Month | Total Maintenance Costs | Total Machine Hours |
January | $2,700 | 300 |
February | 3,000 | 350 |
March | 3,600 | 500 |
April | 4,500 | 690 |
May | 3,200 | 400 |
June | 5,500 | 700 |
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 100-hour increments and $1,000 cost increments.
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