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Problem # 6 : CostsThe University of Maine at Presque Isle has hired you, a managerial accounting student enrolled this semester, to analyze the cost
Problem #: CostsThe University of Maine at Presque Isle has hired you, a managerial accounting student enrolled this semester, to analyze the cost of their IT services
they provide to their students. UMPI has given you the following data which shows the monthly total costs of providing IT services, as well as the number of
students who are using the IT services each month.
Month
Number of
Students Using
IT Services
Total Cost of IT
Services
January $
February $
March $
April $
May $
June $
July $
August $
September $
October $
November $
December $
Answer the following questions in good form. Be sure to provide the detail forumulas as to how you arrived at each answer.
In other words, be sure to show your work! Do not round. Take number out to decimal places.
Use the HighLow method of accounting to answer the following questions:
What is the variable cost per unit?
What is the fixed cost?
UMPI plans to see an increase in student enrollment over the next two years, so they have asked you to calculate the total cost
of providing services to students for projected year and students for projected year
Discuss the limitations of using the HighLow method.
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