Exercise 22-2 The controller of Norton Industries has collected the following mo

Question

Exercise 22-2 The controller of Norton 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 $2,700 300 February 3,000 350 March 3,600 500 April 4,500 690 May 3,200 500 June 5,500 700 Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.) Variable cost per machine hour $ LINK TO TEXT LINK TO TEXT Determine the fixed components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.) Total fixed costs $ LINK TO TEXT LINK TO TEXT Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Variable cost per machine hour = Change in cost/Change in machine hour

= (5500-2700)/(700-300)

Variable cost per machine hour = 7 per machine hour

Fixed cost = 5500-(700*7) = $600

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