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Required information [The following information applies to the questions displayed below.] Nations 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.]

Nations Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firms controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firms 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 Maintenance Costs
January 550 $ 5,003
February 490 4,250
March 260 2,770
April 450 4,280
May 360 2,990
June 440 4,200
July 360 3,060
August 410 3,590
September 480 3,960
October 390 3,210
November 380 3,250
December 350 3,090
Total 4,920 $ 43,653
Average 410 * $ 3,638 *

*Rounded

rev: 05_30_2018_QC_CS-128090

Required:

  1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nations 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.)

monthley maintenance cost = + x

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