The controller of Dugan Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
|
Total |
Total |
|
|
Month |
Maintenance Costs |
Machine Hours |
|
January |
$2,400 |
300 |
|
February |
3,000 |
400 |
|
March |
3,600 |
600 |
|
April |
4,500 |
790 |
|
May |
3,200 |
500 |
|
June |
4,900 |
800 |
Instructions
(a) Determine the fixed and variable cost components using the high low method.
(b) Prepare a graph showing the behavior of maintenance costs, and identify the fixed and variable cost elements. Use 200 unit increments and $1,000 cost increments.