Nations Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firms controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firms 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	Hours of Maintenance Service					Maintenance Costs
January			540				$	4,954
February			480					4,240
March			280					2,770
April			460					4,250
May			340					2,970
June			460					4,170
July			320					3,030
August			440					3,550
September			470					3,990
October			370					3,270
November			340					3,250
December			350					3,090
Total			4,850				$	43,534
Average			404	*			$	3,628	*

*Rounded

4-a. Compute the variable cost per hour and the fixed cost per hour at 620 hours of activity. (Round your answers to 2 decimal places.)

Variable cost per hour
Fixed cost per hour

4-b. Why is the fixed cost per hour possibly misleading?

multiple choice

Because it will not change as the number of hours changes.

Because it will change as the number of hours changes.