Question
Using activity analysis, AAA Company has identified the appropriate cost driver for maintenance costs in a factory as the number of machine hours. The maintenance
Using activity analysis, AAA Company has identified the appropriate cost driver for maintenance costs in a factory as the number of machine hours. The maintenance costs have been observed as follows within the relevant range of 5,000 to 8,000 machine-hours. Month Maintenance Cost Machine Hours January $7,100 5,600 February $8,500 7,100 March $7,400 5,000 April $8,200 6,500 May $9,950 7,300 June $9,800 8,000 July $7,800 6,200 Using the high-low method, determine the variable maintenance cost per machine hour and the monthly fixed maintenance cost. Estimate the total variable maintenance costs and fixed maintenance costs if 6250 Machine hours are projected to be used next month.
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