Prepare a graph showing the behavior of maintenance costs, and identify the fixed and variable cost…
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.