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High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and

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High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Airplane Flight Resource Hours Total Cost Airplane depreciation: High 44,000 $ 18,800,000 Low 28,000 $ 18,800,000 Fuel: High 44,000 445,896,000 Low 28,000 283,752,000 Airplane maintenance: High 44,000 16,200,000 Low 28,000 11,632,000 1. What is the variable rate for airplane depreciation? 0 per flight hour What is the fixed cost for airplane depreciation? 18,800,000 2. What is the cost formula for airplane depreciation? Total cost of airplane depreciation = 18,800,000 3. What is the variable rate for fuel? 10,134 per flight hour What is the fixed cost for fuel? 0 4. What is the cost formula for fuel ? Total cost of fuel = 10,134 V X Number of airplane flight hours 5. What is the variable rate for airplane maintenance? 285.50 X per flight hour What is the fixed cost for airplane maintenance? 4,568,000 6. What is the cost formula for airplane maintenance? Total cost of airplane maintenance = 4,568,000 285.50 X Number of airplane flight hours) 7. Using the three cost formulas that you developed, predict the cost of each resource in a month with 36,000 airplane flight hours. (Note: Dan round intermediate calculations.) Total cost of airplane depreciation 18,800,000 Total cost of fuel 361,824,000 Total cost of airplane maintenance 13,898,000 X

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