Question
Marcie Bread Company (Marcie) bakes loaves of bread. The monthly equipment maintenance cost for Marcie is considered to be a mixed cost. The variable portion
Marcie Bread Company (Marcie) bakes loaves of bread. The monthly equipment maintenance cost for Marcie is considered to be a mixed cost. The variable portion of the cost is related to the number of loaves baked. The production volume and maintenance costs for the past six months are presented below. Marcie uses the high-low method to separate mixed costs into its fixed and variable portions.
Month | Volume of Production (Number of Loaves) | Equipment Maintenance Costs |
February | 268,000 | $5,719 |
March | 263,000 | $5,647 |
April | 338,000 | $6,727 |
May | 129,000 | $3,718 |
June | 586,000 | $10,298 |
July | 258,000 | $5,575 |
Do not enter dollar signs or commas in the input boxes.
a) Calculate the variable rate for the equipment maintenance cost.
Round your answer to 5 decimal places.
b) Calculate the fixed portion of the equipment maintenance cost.
Round your answer to the nearest whole number.
c) Assume that 420,000 loaves is the budgeted production level for July. Using the results of the high-low method in parts a) and b), what is the expected total equipment maintenance cost for July?
Round your answer to 2 decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
SOLUTION a Calculate the variable rate for the equipment maintenance cost Using th...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started