Question
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
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 Month January February March April Service 560 Maintenance Costs $ 5,100 470 4,200 280 2,720 470 4,250 May 320 3,030 June 460 4,130 July 330 3,050 August 440 3,530 September 460 3,960 October 370 3,240 November 350 3,250 December 350 3,100 Total 4,860 $43,560 Average 405* $ 3,630* *Rounded
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