Q1: Q2:11-8 Q3: 11-13 Q:11-1 Q:11-3 CALCULATOR HESSAGE MY INSTRUCTOR FULL SCREEN
ID: 2517415 • Letter: Q
Question
Q1:Q2:11-8
Q3: 11-13
Q:11-1
Q:11-3
CALCULATOR HESSAGE MY INSTRUCTOR FULL SCREEN Exercise 11-5 The controller of Hall Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Total Maintenance Costs Total Machine Hours Month January FebruanY March April May June $8,450 9,640 13,560 17,614 11,500 17,900 4,900 5,600 8,400 11,060 7,000 11,200 Your answer is incorrect. Try again. Determine the variable-cost components using the high-low method. (Round variable cost to 2 decimal places e.g. 12.25.) Variable cost per machine hour 1.72 LINK TO TEXT LINK TO TEXT VIDEO: APPLIED SKILLSVIDEO: APPLIED SKILLS Your answer is incorrect. Try again. Policy 1 2000-2018 John Wiley & Sons,Inc. All Rights Reserved A Di
Explanation / Answer
Answer to Exercise 11-5:
As per High- Low method:
Variable Cost per Unit = y2 – y1 / x2 – x1
Total Cost at the Highest level of Activity (y2) = $17,900
Total Cost at the Lowest level of Activity (y1) = $8,450
Units / MH at the Highest level of Activity (x2) = 11,200 MH
Units / MH at the Lowest level of Activity (x1) = 4,900 MH
Variable Cost per Unit = (17,900 – 8,450) / (11,200 – 4,900)
Variable Cost per Unit = 9,450 / 6,300
Variable Cost per Unit = $1.5 per Machine Hour
Total Cost = a + bx
Total Cost = $17,900
Fixed Cost (a) = ??
Variable Cost per Machine Hour (b) = $1.50
Machine Hour (x) = 11,200 MH
$17,900 = a + 1.50 * 11,200
$17,900 = a + $16,800
a = $1,100
Therefore, Fixed Cost is $1,100.
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