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Required information 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,
Required information 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: Month Hours of Maintenance Service 550 Maintenance Costs $ 5,194 January February March April 470 4,220 270 2,730 470 4,280 May June 360 2,970 440 4,160 July 320 3,030 August 420 3,580 September 480 4,050 October 350 3,270 November 360 3,190 December 350 3,070 Total 4,840 $43,744 Average 403* $ 3,645* *Rounded
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