- Requirements 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. 2. Using the high-low method, determine the cost function for each cost. 3. Combine the preceding information to get a monthly operating cost function for the Salter Corporation. 4. Next month, Salter expects to use 440 machine hours, have 60 employees, and ship 9,800 units. Estimate the total operating cost for the month. - Data Table Machine Hours $ 158 Month January February March April Maintenance Costs $ 4,590 4,505 4,625 4,865 5,180 125 80 233 $ 313 $ May 467 Health Number of Shipping Units Insurance Employees Costs Shipped $ 8,650 59 $ 24,955 7,130 $ 8,650 $ 29,015 8,290 8,650 98 $ 27,685 7,910 8,650 110 $ 22,680 6,480 8,650 85 $ 20,580 5,880 8,650 90 $ 32,270 9,220 8,650 97 30,765 8,790 $ 8,650 $ 29,470 8,420 8,650 102 $ 23,695 6,770 8,650 101 $ 24,990 7,140 8,650 93 $ 19,320 5,520 $ 8,650 95 $ 33,775 9,650 $ 4,746 276 346 359 86 June July August September October November December $ $ $ $ $ $ 4,971 4,967 5,022 5,299 5,636 415 $ 482 560 4,735 280 Salter Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2018. The following cost and other data were gathered for 2017: : (Click the icon to view the cost and other data) Read the requirements. Requirement 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. Cost Cost function Mixed Explanation The cost neither remains constant in total nor remains constant per unit. Maintenance Fixed Health insurance Shipping costs Although the cost driver varies from month to month, the total cost remains constant. The cost per unit remains constant each month. Variable Requirement 2. Using the high-low method, determine the cost function for each cost. Begin by selecting the general formula that represents the linear cost function for each cost. Maintenance y = a + bx Health insurance y = a Shipping costs y = bx Now determine the cost function for each cost. (Enter all values in the same format as the general linear formula. If a box is not used in the equation, leave the box empty; do not enter a zero or select a label.) Cost function Maintenance y = + Health insurance y = Shipping costs y =