Reference no: EM133120894

Questions -

Q1. During the first two months of operations, i.e. January and February 2020, Hamzah Inc. produced 5342 and 8708 units of products respectively. Maintenance costs in those two months were $103842, $159328 respectively. The manager, Umar, initially considered maintenance to be a fixed cost, but by the end of the second month of operations, he realized that maintenance cost is probably a mixed cost. He is expecting production and sales to increase to 19472 in the month of March and as such wants a better prediction of maintenance cost.

(a) Using the high-low method, determine the estimated variable maintenance cost per unit?

(b) Using the high-low method, determine the estimated total fixed maintenance cost?

(c) Using the answers from (a) and (b), determine the best estimate of maintenance cost for the month of March?

Q2. During the first two months of operations, i.e. January and February 2020, Hamzah Inc. produced 6284 and 9141 units of products respectively. Maintenance costs in those two months were $110952, $173108 respectively. The manager, Umar, initially considered maintenance to be a fixed cost, but by the end of the second month of operations, he realized that maintenance cost is probably a mixed cost. He is expecting production and sales to increase to 16154 in the month of March and as such wants a better prediction of maintenance cost.

(a) Using the high-low method, determine the estimated variable maintenance cost per unit?

(b) Using the high-low method, determine the estimated total fixed maintenance cost?

(c) Using the answers from (a) and (b), determine the best estimate of maintenance cost for the month of March?