managerial accounting solutions

Slonaker Inc. has provided the following data concerning its maintenance costs:

	Machine-Hours	Maintenance Cost
April	5,817	$30,397
May	5,800	$30,307
June	5,782	$30,255
July	5,779	$30,251
August	5,735	$30,096
September	5,813	$30,378
October	5,845	$30,424
November	5,819	$30,396
December	5,803	$30,336

Management believes that maintenance cost is a mixed cost that depends on machine-hours.

Required:

Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method.(Round your "Variable cost" to 2 decimal places. Omit the "$" sign in your response.)

Variable cost per machine-hour	$
Fixed cost per month	$

 
Explanation:

	Machine-Hours	Maintenance Cost
High activity level	5,845	$30,424
Low activity level	5,735	$30,096

Variable cost = Change in cost ÷ Change in activity
= ($30,424 - $30,096) ÷ (5,845 machine-hours - 5,735 machine-hours)
= $328 ÷ 110 machine-hours
= $2.98 per machine-hour
Fixed cost element = Total cost - Variable cost element
= $30,096 - ($2.98 per machine-hour × 5,735 machine-hours)
= $13,006