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Find monthly fixed support cost and variable support cost

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Reference no: EM132475189

Division of Mixed Costs into Variable and Fixed Components

Molly Flutie, president of First Tool, Co., has asked for information about the cost behavior of manufacturing support costs. Specifically, she wants to know how much support cost is fixed and how much is variable. The following data are the only records available:

Month              Machine Hours                       Support Costs

May                        1,700                              $ 22.000

June                         1,600                               21.000

July                          1,500                                19.500

August                        1,400                             18.500

September                    1,300                             18.000

Question 1. Find monthly fixed support cost and the variable support cost per machine hour by the high-low method.

Question 2. Explain how your analysis for requirement I would change if new October data were received and machine hours were 1,650 and support costs were $24,000.

Question 3. A least-squares regression analysis gave the following output:

Regression equation: Y = $4,050 + $10.50X

What recommendations would you give the president based on these analyses?

Reference no: EM132475189

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