Smead, Inc. has provided the following data concerning its maintenance costs. Management believes that maintenance cost is a mixed cost that depends on Machine-hours. Estimate the variable cost per machine-hour, the fixed cost per month using the high-low method, show the resulting high/low equation and estimate maintenance costs if machine hours were 5,900 hours. How do you know the result of your calculation for 5,900 hours is reasonable? Show all of your work in order to earn full points!

Machine-Hours

Maintenance Cost

April

5,799

$30,379

May

5,782

$30,289

June

5,764

$30,237

July

5,761

$30,233

August

5,717

$30,078

September

5,795

$30,360

October

5,809

$30,388

November

5,801

$30,378

December

5,785

$30,318

Estimate the variable cost per machine-hour (since this is in dollars and cents, round to two decimal places)

Estimate the fixed cost per month using the high-low method (round this amount to the nearest dollar)

Show the resulting high/low equation

Estimate maintenance costs if machine hours were 5,900 hours, rounding to the nearest dollar

How do you know the result of your calculation for 5,900 hours is reasonable