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Robert Inc. has total monthly maintenance costs that fluctuate with varying direct labour hours as follows: Maintenance Labour Hours Cost January $14,500 3,500 February
Robert Inc. has total monthly maintenance costs that fluctuate with varying direct labour hours as follows: Maintenance Labour Hours Cost January $14,500 3,500 February $13,960 3,600 March $11,500 2,500 April $8,500 1,500 May $11,000 2,250 June $10,000 2,125 Required: 1. Use the high-low method to separate the maintenance expense into its variable and fixed cost components. (5 marks) 2. State the cost formula for the maintenance expense. (1 mark) 3. Would you recommend using the cost formula from your answer in part 2 to estimate the total maintenance expense for 2,558 labour hours? Why or why not? (1 mark)
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