The controller of Hall 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 | $2,640 | 3,500 |
February | 3,000 | 4,000 |
March | 3,600 | 6,000 |
April | 4,500 | 7,900 |
May | 3,200 | 5,000 |
June | 4,620 | 8,000 |
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.
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