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High-Low Method to Determine Fixed Cost and Variable Rate McGarvey Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Number of Purchase Month Purchasing Cost Orders January $19,250 370 February 18,060 320 March 18,200 340 April 18,050 410 May 19,345 400 June 19,500 450 July 19,670 460 August 21,420 600 September 19,430 440 October 20,020 570 November 18,800 470 December 19,340 480 Required: 1 Notaristaliaksaint and the last 2. Calculate the variable rate for purchasing cost based on the number of purchase orders. (Round to the nearest cent.) per purchase order 3. Calculate the fixed monthly cost of purchasing. 4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate. Round variable rate to the nearest cent. Total purchasing cost + 5. If McGarvey Manufacturing Company estimates that next month will have 440 purchase orders, what is the total estimated purchasing cost for that month? $ 6. What if McGarvey Manufacturing wants to estimate purchasing cost for the coming year and expects 5,350 purchase orders? What will estimated total purchasing cost be? What is the total fixed purchasing cost? Why doesn't it equal the fixed cost calculated in Requirement 3 above? because there are 12 months in the year Mixed Costs and Cost Formula Callie's Gym is a complete fitness center. Owner Callie Ducain employs various fitness trainers who are expected to staff the front desk and to teach fitness classes. While on the front desk, trainers answer the phone, handle walk-ins and show them around the gym, answer member questions about the weight machines, and do light cleaning (wiping down the equipment, vacuuming the floor). The trainers also teach fitness classes (e.g., pilates, spinning, body pump) according to their own interest and training level. The cost of the fitness trainers is $1,100 per month and $50 per class taught. Last month, 100 classes were taught. Required: 1. Develop a cost equation for total cost of labor. Total labor cost + per class taught 2. What was total variable labor cost last month? 3. What was total labor cost last month? 4. What was the unit cost of labor (per class) for last month? per class 5. What if Callie increased the number of classes offered by 50 percent? a. What would be the total labor cost? b. The unit labor cost? If required, round your answer to the nearest cent. 4. What was the unit cost of labor (per class) for last month? per class 5. What if Callie increased the number of classes offered by 50 percent? a. What would be the total labor cost? b. The unit labor cost? If required, round your answer to the nearest cent. per class c. Why did the unit labor cost decrease? Because the fixed cost per unit goes down