Solution-Determine the break down of the mixed costs

Determine the break down of the mixed costs

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Reference no: EM132779889

Question - The maintenance costs of a college department are listed below. The Controller wishes to use service hours as a cost driver for planning purposes.

Month	Service Hours	Maintenance Cost
Jan	525	$4,710
Feb	505	4,310
Mar	310	2,990
Apr	495	4,200
May	315	3,000
Jun	485	4,215
Jul	315	2,950
Aug	405	3,680
Sep	475	4,100
Oct	345	3,250
Nov	350	3,260
Dec	335	3,015
Totals	4,860	$43,680

Required -

1. Use the high/low method to determine the break down of the mixed costs. Express the cost in the format Y=a + bx Explain each of the terms.

Use this formula to show the maintenance costs for a month in which there were 450 service hours

2. A regression analysis was done on the above data, with the following results:

INTERCEPT = 655.92

SLOPE = 7.368

R2 = 0.983451

Use this information to show maintenance costs for the month with 450 service hours. Explain the value of the R².

3. Explain the difference between the two results.

4. Which method would you use for planning purposes? Why? Why would you not use the other method?

Reference no: EM132779889

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Determine the break down of the mixed costs

Reference no: EM132779889

Reference no: EM132779889

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