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Required information [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.,
Required information [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 Service 570 Maintenance Costs $ 5,031 February March April May June 480 4,250 300 2,790 470 4,340 350 2,990 460 4,130 July 350 3,080 August 430 3,570 September 470 4,050 October 370 3,200 November 380 3,250 December 330 3,060 Total 4,960 $43,741 Average 413* $ 3,645* *Rounded Required: 1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness, Inc. Express the cost behavior pattern in equation form. (Round coefficient of X to 2 decimal places and other answer to the nearest whole dollar amount.) Monthly maintenance cost =
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