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The Western Hills Company has total monthly maintenance costs that fluctuate with varying direct labour hours as follows: Labour Maintenance Hours Cost January 490
The Western Hills Company has total monthly maintenance costs that fluctuate with varying direct labour hours as follows: Labour Maintenance Hours Cost January 490 $53,050 February 485 52,540 March 460 50,100 April 445 48,800 May 420 46,400 June 425 46,050 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 438 labour hours? Why or why not? (1 mark)
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