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Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, DC, 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, DC, 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: Month January Hours of Maintenance Service 550 Maintenance Costs $ 4,772 February 470 4,210 March 280 2,720 April 470 4,280 May 330 2,970 June 460 4,170 July 350 3,090 August 420 3,530 September 460 3,960 October 380 3,270 November 360 3,180 December 370 3,030 Total 4,900 $43,182 Average 408 $ 3,599* "Rounded
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