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Please, please answer all the questions because they are connected Required information Problem 6-38 High-Low Method; Fitness Centers (LO 6-1, 6-2, 6-5) (The following information
Please, please answer all the questions because they are connected
Required information Problem 6-38 High-Low Method; Fitness Centers (LO 6-1, 6-2, 6-5) (The following information applies to the questions displayed below.] 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 550 470 270 500 Month January February March April May June July August September October November December Total Average 360 460 330 430 500 370 350 370 Maintenance Costs $ 5,046 4,240 2,750 4,300 3,020 4,110 3,030 3,560 3,970 3,280 3,180 3,120 $43, 606 4,960 413* $ 3,634* *Rounded Problem 6-38 Part 1 Required: 1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness, Inc. Express the cost behavior pattern in equation form. (Round coefficient of Xto 2 decimal places and other answer to the nearest whole dollar amount.) Monthly maintenance cost = x 2. Using your answer to requirement 1, what is the variable component of the maintenance cost? (Round your answer to 2 decimal places.) Variable maintenance cost per hour 3. Compute the predicted maintenance cost at 680 hours of activity. Maintenance cost 4-a. Compute the variable cost per hour and the fixed cost per hour at 690 hours of activity. (Round your answers to 2 decimal places.) Variable cost per hour Fixed cost per hourStep by Step Solution
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