Nations Capital Fitness, Incorporated, 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 $ 5,068 February 480 4,160 March 280 2,800 April 480 4,300 May 320 2,990 June 450 4,190 July 340 3,080 August 420 3,580 September 480 3,980 October 400 3,210 November 360 3,210 December 340 3,090 Total 4,910 $ 43,658 Average 409 $ 3,638

2. Using your answer to requirement 1, what is the variable component of the maintenance cost?

3. Compute the predicted maintenance cost at 660 hours of activity.

4-a. Compute the variable cost per hour and the fixed cost per hour at 670 hours of activity.

4-b. Why is the fixed cost per hour possibly misleading? Note: Round your answer to 2 decimal places.