March Problem 6-38 Nation's Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.Cana. The High Low Method, fitness firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year Centers The cost behavior pattern of the firm's equipment maintenance costs met be determined. The account (106-1,6-2, 6-5) ing staff has suggested the use of an equation, in the form of Y= c + hl, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows Cost prediction at 590 hours of actity, mainte Hours of Maintenance nance cost. 51995 Month Maintenance Service Costs January 520 54.470 February 4250 2,820 Art 1250 Way 2.960 June 4.200 July 2000 August 3.600 September 4050 Odobes 3.300 November 3,160 December 3.03 4.800 $43.700 Average $ 3.500 190 300 500 310 320 400 410 350 340 320 266 Chapter 6 Activity Analysis. Cost Behodo, and Cond Estimation Required: 1. Using the high-low method of cost estimation estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness, Inc. Express the cost behavior putem in equation form 2. Using your answer to requirement (1), what is the variable component of the maintenance 3. Compute the predicted maintenance costu 590 beurs of activity 4. Compute the variable cost per bear and the fined cont per hour at 60 hours of activity. Explain why the fixed cost per hour could be misleading CMA adapted COSE