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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

= 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

  1. Using the high- low method, find total variable cost, total fixed costs for utilities?
  2. 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

  1. Using the high- low method, find variable cost per unit, total fixed costs, and the total costs equation?
  2. 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

  1. Using the high-low method, determine the total amount of fixed costs and the amount of variable cost per unit.
  2. Estimate the maintenance cost in December if the number of units is 25,000.

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