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Mahmood company gathered the following information on maintenance costs and factory machine usage for the last six months:
Month Maintenance Cost Factory Machine Hours
January Rs.24,400 13,900
February 29,200 17,600
March 29,000 16,800
April 22,340 13,200
May 19,900 11,600
June 12,700 6,600
Instructions
Using the high-low method;
(a) What is the estimated variable portion of maintenance costs per factory machine hour? (Rounded to 2 decimal places)
(b) What is the estimated fixed maintenance cost each month?
(c) If it is estimated that 12,000 factory machine hours will be run in August, what is the expected total maintenance cost for August?
Answer & Explanation
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