Finch Computer Services, Inc. has been in business for six months. The following are basic operating data for that period: Month JulyAug.Sept.Oct.Nov.Dec.Service hours 114 140 258 422 322 332 Revenue$6,612 $8,120 $14,964 $24,476 $18,676 $19,256 Operating costs$4,220 $5,240 $7,190 $11,180 $9,200 $10,530 RequiredWhat is the average service revenue per hour in each month and the overall average for the six-month period?Use the high-low method to estimate the total monthly fixed cost and the variable cost per hour.Determine the average contribution margin per hour.

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units) Total fixed cost = Total Highest activity cost - Highest activity units*Variable cost per unit1. Month July Aug. Sept. Oct. Nov. Dec. Total Revenue 6,612 8,120 14,964 24,476 18,676 19,256 $19,256 Service hours 114 140 258 422 322 332 $332 Average service revenue per hour $58 $58 $58 $58 $58 $58 $582. Variable cost per hour = ($11,180 - $4,220) / (422 - 114) = $22.60 per hour Total fixed cost = $11,180 - 422*$22.60 = $1,643 3. Particulars Amount Average Revenue per hour $58.00 Less: Variable cost per hour $22.60 Average Contribution margin per hour $35.40

Answered: Finch Computer Services, Inc. has been…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Finch Computer Services, Inc. has been in business for six months. The following are basic operating data for that period:

	Month
	July	Aug.	Sept.	Oct.	Nov.	Dec.
Service hours		114			140			258		422		322		332
Revenue	$	6,612		$	8,120		$	14,964	$	24,476	$	18,676	$	19,256
Operating costs	$	4,220		$	5,240		$	7,190	$	11,180	$	9,200	$	10,530

Required

What is the average service revenue per hour in each month and the overall average for the six-month period?
Use the high-low method to estimate the total monthly fixed cost and the variable cost per hour.
Determine the average contribution margin per hour.

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