The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
| Month | Total Maintenance Costs | Total Machine Hours |
| January | $2,700 | 300 |
| February | 3,000 | 350 |
| March | 3,600 | 500 |
| April | 4,500 | 690 |
| May | 3,200 | 400 |
| June | 5,500 | 700 |
Instructions
- Determine the fixed and variable cost components using the high-low method.
- Prepare a graph showing the behavior of maintenance costs, and identify the fixed and variable cost elements. Use 100-hour increments and $1,000 cost increments
Solution
