Question
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 Maintenance Service Month January February 550 Maintenance Costs $ 5,232 490 4,170 March April 270 2,740 450 4,330 May June 320 3,040 470 4,200 July 330 3,090 August 450 3,520 September 450 3,970 October 370 3,250 November 390 3,190 December 340 3,070 Total 4,880 407- $43,802 $ 3,650* Average "Rounded
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