1. Compute the predicted maintenance cost at 670 hours of activity. Required informationPR 6-38 (Algo) High-Low Method; Fitness Centers (LO 6-1, 6-2, 6-5)[The following information applies to the questions displayed below.]Nation's Capital Fitness, Incorporated, operates a chain of fitness centers in the Washington, D.C., area. The firm'scontroller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior patternof the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of anequation, in the form of Y= a + bx, for maintenance costs. Data regarding the maintenance hours and costs for last yearare as follows:MonthJanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecemberTotalAverageHours ofMaintenanceService5404902504603504703204104603803503404,820402MaintenanceCosts$ 5,1784,2302,8004,3303,0304,1403,0903,5404,0403,2103,2003,070$ 43,858$ 3,655

High-low method is one of the techniques that is used to separate fixed and variable components from…

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Compute the predicted maintenance cost at 670 hours of activity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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