Question
Hello team, I will cut and paste this: Nations Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firms
Hello team, I will cut and paste this:
Nations Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firms controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firms equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y = a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows:
Month | Hours of Maintenance Service | Maintenance Costs | ||||||
January |
| 530 |
|
| $ | 4,882 |
|
|
February |
| 450 |
|
|
| 4,160 |
|
|
March |
| 270 |
|
|
| 2,750 |
|
|
April |
| 490 |
|
|
| 4,260 |
|
|
May |
| 340 |
|
|
| 2,970 |
|
|
June |
| 440 |
|
|
| 4,190 |
|
|
July |
| 360 |
|
|
| 3,040 |
|
|
August |
| 400 |
|
|
| 3,600 |
|
|
September |
| 460 |
|
|
| 4,030 |
|
|
October |
| 370 |
|
|
| 3,200 |
|
|
November |
| 360 |
|
|
| 3,170 |
|
|
December |
| 330 |
|
|
| 3,070 |
|
|
Total |
| 4,800 |
|
| $ | 43,322 |
|
|
Average |
| 400 | * |
| $ | 3,610 | * |
|
4-a. Compute the variable cost per hour and the fixed cost per hour at 630 hours of activity. (Round your answers to 2 decimal places.)
****HERE IS MY MATH******************** |
Variable Cost Per Unit = Difference in Total Cost
Difference in Hours
= $4882 - $2750 = 2132
= 530 270 = 260
2132/260= 8.2 PER UNIT
FIXED COST = Total Costs Variable Costs
= $4882 ($8.20 x 530)
= $4882 4346
= 536
My question is, in order to figure this out at 630 hours of activity, do I do the same work above and just use 630 instead of 530?
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