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Nation's Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's 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 ofY=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 $4,964

February 480 4,240

March 260 2,760

April 470 4,280

May 330 3,000

June 450 4,160

July 330 3,080

August 440 3,580

September 500 4,000

October 400 3,260

November 370 3,180

December 340 3,120

Total 4,920 $43,624

Average 410* $3,635*

*Rounded

Requirements:

1.Compute the variable cost per hour and the fixed cost per hour at 640 hours of activity.(Round your answers to 2 decimal places.)

2.Why is the fixed cost per hour possibly misleading?

3.Compute the predicted maintenance cost at 630 hours of activity.

4.Using your answer to requirement (1), what is the variable component of the maintenance cost?(Round your answer to two decimal places.)

5.Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness, Inc. Express the cost behavior pattern in equation form.(Round coefficient ofXto 2 decimal places and other answer to the nearest whole dollar amount.) Monthly Maintenance costs = ___________+____________X