70.2K

Verified Solution

Link Copied!

High-Low Method, Cost Formulas

During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:

Resource	Airplane Flight Hours			Total Cost
Airplane depreciation:
High	44,000			$ 18,100,000
Low	28,000			$ 18,100,000
Fuel:
High	44,000			445,896,000
Low	28,000			283,752,000
Airplane maintenance:
High	44,000			16,232,000
Low	28,000			12,016,000

Required:

Use the high-low method to answer the following questions. If an answer is zero, enter "0". If required, round your answers to nearest dollar.

1. What is the variable rate for airplane depreciation? $fill in the blank 1per flight hour

What is the fixed cost for airplane depreciation? $fill in the blank 2

2. What is the cost formula for airplane depreciation?

Total cost of airplane depreciation = $fill in the blank 3

3. What is the variable rate for fuel? $fill in the blank 4 per flight hour

What is the fixed cost for fuel? $fill in the blank 5

4. What is the cost formula for fuel?

Total cost of fuel = $fill in the blank 6 x Number of airplane flight hours

5. What is the variable rate for airplane maintenance? $fill in the blank 8 per flight hour

What is the fixed cost for airplane maintenance? $fill in the blank 9

6. What is the cost formula for airplane maintenance?

Total cost of airplane maintenance = $fill in the blank 10 + ( $fill in the blank 11 Number of airplane flight hours )

7. Using the three cost formulas that you developed, predict the cost of each resource in a month with 36,000 airplane flight hours. (Note: Do not round intermediate calculations.)

Total cost of airplane depreciation	$
Total cost of fuel	$
Total cost of airplane maintenance	$

Answer & Explanation Solved by verified expert

See Answer