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Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used
Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to develop 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 Hours of Paintenance Service maintenance Month anuary February rarch April June Costs 528 $5,254 460 4,250 260 2,30 49 4,330 360 438 4,150 July 340 3,000 August 430 3,90 September 460 October 4,030 3,200 November 300 3,170 December 320 3,00 Total 4,790 $43,994 Average $3,000 Rounded Problem 6-38 Part 2 2. Using your answer to requirement 1. what is the variable component of the maintenance cost? (Round your answer to 2 decimal places.) per hour
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