Ques 2

Rogue Company keeps detailed records of maintenance expense. April had the highest level of activity with 175,000 units and September had the lowest level of activity with only 125,000 units produced. Maintenance expense for April was $35,000 and for September it was $20,000. The average maintenance cost for the year was $22,850 and the predetermined overhead rate was $3.80 per unit produced. Show all your calculations for the following questions: a) Using the High-Low method calculate the fixed cost and the variable rate. Round the variable rate to 2 decimal points. (5 marks) b) Show the cost equation for maintenance expense. (2.5 Marks) c) If the expected production is estimated to be 150,000 units what would be the estimated maintenance expense be? (2.5 Marks)