QUESTION 5        Harrell & Harrell wants to predict Maintenance for the firm’s at different level of working hours used per month

QUESTION 5       

Harrell & Harrell wants to predict Maintenance for the firm’s at different level of working hours used per month. The following data have been gathered for the first 6 months:

Determine the fixed and variable components for Maintenance cost using the high-low method?

Solution:

VC per = cost of the highest – cost of lowest/ highest level-lowest level

VC per unit = (536-320)/(2800-1450)=0.16 per hour

TCV for the lowest = 1450x0.16= 232

TMC- TVC = TFC

320-232= 88

QUESTION 6

ABC hospital has collected the following data on utilities costs and use of the scanner since the first of the year.

1. Using the high- low method, find total variable cost, total fixed costs for utilities?                                                                                                                        
2. What is the estimated cost for a month in which 200 scans were sold?    

QUESTION 7

Winston Company has collected the following sales data for recent months:

1. Using the high- low method, find variable cost per unit, total fixed costs, and the total costs equation?
2. What is the estimated cost for a month in which 21600 units sold?

QUESTION 8

Assume the local ABC Company assigns you the task of estimating total maintenance cost on its delivery vehicles. This cost is a mixed cost. You receive the following data from past months

1. Using the high-low method, determine the total amount of fixed costs and the amount of variable cost per unit.

Estimate the maintenance cost in December if the number of units is 25,000