Estimated total fixed maintenance cost

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Question - During the first two months of operations, i.e. January and February 2020, Hamzah Inc. produced 5838 and 8343 units of products respectively. Maintenance costs in those two months were $101160, $172157 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 18670 in the month of March and as such wants a better prediction of maintenance cost.

a) Using the high-low method, the estimated total fixed maintenance cost?

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

Reference no: EM133055947

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