Denapasa Manufacturing leases a vacuum cleaning system for a basic monthly fee plus an additional cost per hour used above a given minimum for each month. Given below is the information for the most recent six-month period on the number of machine hours of use and the total cost under this lease.

You are to provide information for planning on the variable and fixed cost elements in this lease.
a. Use the high-low method to determine the variable cost per machine hour for months 7 and 8.
b. Use the high-low method to compute the fixed and variable costs for months 7 and 8.

Transcribed Image Text:

Month Machine Hours Total Cost $58,200 6,300 4,400 4,700 49,935 52,390 54,440 5,200 5,600 5,000 10 11 12 56,620 53,800