Reference no: EM132715068

Question: Andover Company makes weather balloons. The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory. Data for the past six months were collected.

Month       Maintenance cost       Machine hours

January           $10,120                   526

February             9,560                   389

March                 9,712                   412

April                 10,460                   569

May                  10,226                   541

June                  9,686                    399

Required: A. Using the high-low method, calculate the fixed cost of maintenance and the variable rate per machine hour.

Fixed cost$

Variable rate$ per machine hour

B. Using the high-low method, construct the cost formula for the total maintenance cost.

Total maintenance cost=Fixed cost+Variable cost =($ per hour X no. of machine hours)

C. Calculate the budgeted cost for maintenance assuming that 485 hours are worked next month.