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Accounting: HIg-low method, cost analysis.

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The controller of Dugan Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

MONTH- MAINTENANCE COST 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

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.

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Solution Summary

The problem deals with determining the fixed and variable cost of a given series of values and also the cost behavior.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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