Liberty Bell Fitness, Inc. operates a chain of fitness centers in Philadelphia. 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		560		$	5,478
February		470			4,210
March		270			2,810
April		490			4,280
May		310			3,010
June		480			4,100
July		340			3,010
August		410			3,530
September		500			4,020
October		350			3,270
November		350			3,160
December		350			3,100
Total		4,880		$	43,978
Average		407		$	3,665

2.

value: 16.66 points

Required information

Required:

1.

Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Liberty Bell Fitness, Inc. Express the cost behavior pattern in equation form. (Round "Variable cost per hour" to 2 decimal places.)

Total Maintenance cost ?real + ? real X

Using your answer from requirement 1, what is the variable component of the maintenance cost? (Round your answer to 2 decimal places.)

Maintenance cost ? per hour.

Compute the predicted maintenance cost at 590 hours of activity.
Maintenance cost ? Compute the variable cost per hour and the fixed cost per hour at 600 hours of activity. (Round your answers to 2 decimal places.)