Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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:

Resource Airplane Flight Hours Total Cost
Airplane depreciation:
High 44,000 $ 18,100,000
Low 28,000 $ 18,100,000
Fuel:
High 44,000 445,896,000
Low 28,000 283,752,000
Airplane maintenance:
High 44,000 16,232,000
Low 28,000 12,016,000

Required:

Use the high-low method to answer the following questions. If an answer is zero, enter "0". If required, round your answers to nearest dollar.

1. What is the variable rate for airplane depreciation? $fill in the blank 1per flight hour

What is the fixed cost for airplane depreciation? $fill in the blank 2

2. What is the cost formula for airplane depreciation?

Total cost of airplane depreciation = $fill in the blank 3

3. What is the variable rate for fuel? $fill in the blank 4 per flight hour

What is the fixed cost for fuel? $fill in the blank 5

4. What is the cost formula for fuel?

Total cost of fuel = $fill in the blank 6 x Number of airplane flight hours

5. What is the variable rate for airplane maintenance? $fill in the blank 8 per flight hour

What is the fixed cost for airplane maintenance? $fill in the blank 9

6. What is the cost formula for airplane maintenance?

Total cost of airplane maintenance = $fill in the blank 10 + ( $fill in the blank 11 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: Do not round intermediate calculations.)

Total cost of airplane depreciation $
Total cost of fuel $
Total cost of airplane maintenance $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

23rd Edition

978-0324662962

More Books

Students also viewed these Accounting questions