Nation's Capital Fitness, Incorporated, 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 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 February March April May June July August September October November December Total Average Hours of Maintenance Service 540 470 280 470 330 480 360 400 470 370 340 360 4,870 406 Maintenance Costs $ 5,058 4,240 2,770 4,340 2,990 4,160 3,040 3,560 4,030 3,290 3,220 3,030 $ 43,728 $ 3,644

Nation's Capital Fitness, Incorporated, 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 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: a. Compute the variable cost per hour and the fixed cost per hour at 620 hours of activity. b. Why is the fixed cost per hour possibly misleading? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Compute the variable cost per hour and the fixed cost per hour at 620 hours of activity. Note: Round your answers to 2 decimal places