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 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		560			$	5,520
February		470				4,260
March		260				2,820
April		500				4,280
May		340				2,970
June		460				4,170
July		350				3,060
August		410				3,590
September		470				3,970
October		370				3,290
November		370				3,250
December		350				3,110
Total		4,910			$	44,290
Average		409	*		$	3,691	*

*Rounded

4-a. Compute the variable cost per hour and the fixed cost per hour at 630 hours of activity. (Round your answers to 2 decimal places.)

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

Because it will change as the number of hours changes.

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