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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 in
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 560 470 260 490 360 Month January February March April May June July August September October November December Total 360 430 Maintenance Costs $ 5,380 4,260 2,800 4,250 3,050 4,160 3,020 3,570 3,960 3,210 3,250 3,050 $43,960 $ 3,663* 460 350 340 330 4,880 407* Average *Rounded 2. Using your answer to requirement (1), what is the variable component of the maintenance cost? (Round your answer to two decimal places.) Variable maintenance cost per hour
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