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

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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:

Month	Maintenance cost	Working Hours
1	$ 330	1650
2	$320	1450
3	$502	2450
4	$456	2100
5	$470	2340
6	$536	2800

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.

Month	No. Of Scans	Utilities Cost (RM)
January Feb Mac Apr May June July Aug September Oct November Dec	60 70 90 120 100 130 150 140 110 80	2200 2600 2900 3300 3000 3600 4000 3600 3100 2500

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:

Month	Units sold	Total Cost
6	20500	$20960
7	22300	$21428
8	18750	$20505
9	21200	$21395

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

Month	Units	Costs
March	8,000	$14,000
April	10,000	14,960
May	9,000	15,200
June	11,000	15,920
July	10,000	15,920
August	13,000	16,880
September	14,000	18,080
October	18,000	19,280
November	20,000	21,200

 

 

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