Question
QUESTION 5 Harrell & Harrell wants to predict Maintenance for the firms at different level of working hours used per month. The following data have
QUESTION 5
Harrell & Harrell wants to predict Maintenance for the firms at different level of working hours used per month. The following data have been gathered for the first 6 months:
Month | Maintenance cost | Working Hours |
1 | $ 330 | 1650 |
2 | $320 | 1450 lowest |
3 | $502 | 2450 |
4 | $456 | 2100 |
5 | $470 | 2340 |
6 | $536 | 2800 highest |
12 | 20.000
20.000*016= 3200 tvc +88= 3288 Rm | |
high and low method
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|
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= variable cost cost per hour = cost of the highest- cost of the lowest/ highest level- lowest level
= 536- 320/ 2800-1450 = 0.16 v c per hour
Lowest level = 1450 * 0.16= 232 TVC
Highest level = 2800*0.16= 448 TVC
Mix cost for June = 536- 448 = 88 TFC
Mix cost = tvc+ TFC
320 = 232+TFC
320-232= 88 TFC
$470 88 = 382 vc
July
5000 hours = TFC+TVC = 88+ (0.16* 5000) 88+800= 888 Maintenance for July
Determine the fixed and variable components for Maintenance cost using the high-low method?
Solution:
VC per = cost of the highest cost of lowest/ highest level-lowest level
VC per unit = (536-320)/(2800-1450)=0.16 per hour
TCV for the lowest = 1450x0.16= 232
TMC- TVC = TFC
320-232= 88
QUESTION 6
ABC hospital has collected the following data on utilities costs and use of the scanner since the first of the year.
Month | No. Of Scans | Utilities Cost (RM) |
January Feb Mac Apr May June July Aug September Oct November Dec | 60 70 90 120 100 130 150 140 110 80 | 2200 2600 2900 3300 3000 3600 4000 3600 3100 2500 |
- Using the high- low method, find total variable cost, total fixed costs for utilities?
- What is the estimated cost for a month in which 200 scans were sold?
QUESTION 7
Winston Company has collected the following sales data for recent months:
Month | Units sold | Mixed Cost |
6 | 20500 | $20960 |
7 | 22300 | $21428 |
8 | 18750 | $20505 |
9 | 21200 | $21395 |
- Using the high- low method, find variable cost per unit, total fixed costs, and the total costs equation?
- What is the estimated cost for a month in which 21600 units sold?
QUESTION 8
Assume the local ABC Company assigns you the task of estimating total maintenance cost on its delivery vehicles. This cost is a mixed cost. You receive the following data from past months
Month | Units | Costs |
March | 8,000 | $14,000 |
April | 10,000 | 14,960 |
May | 9,000 | 15,200 |
June | 11,000 | 15,920 |
July | 10,000 | 15,920 |
August | 13,000 | 16,880 |
September | 14,000 | 18,080 |
October | 18,000 | 19,280 |
November | 20,000 | 21,200 |
- Using the high-low method, determine the total amount of fixed costs and the amount of variable cost per unit.
- Estimate the maintenance cost in December if the number of units is 25,000.
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