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The Western Thrills Company has total monthly maintenance costs that fluctuate with varying direct labour hours as follows: January February March April Maintenance Labour Hours
The Western Thrills Company has total monthly maintenance costs that fluctuate with varying direct labour hours as follows: January February March April Maintenance Labour Hours Cost $610,000 9,000 $590,000 9,500 $580,000 8,000 $530,000 6,500 $570,000 7,000 $540,500 6,750 May June 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 6,558 labour hours? Why or why not? (1 mark)
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