Required information [The following information applies to the questions displayed below.] Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to develop an equation, in the form of Y= a +bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service 520 490 300 500 310 480 320 400 470 Monthly maintenance cost= 350 340 320 4,800 400 Maintenance Costs $4,470 4,260 2,820 4,350 2,960 4,200 3,000 3,600 4,050 3,300 3,160 3,030 $43,200 $ 3,600 Required: 1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness, Inc. Express the cost behavior pattern in equation form. (Round coefficient of X to 2 decimal places and other answer to the nearest whole dollar amount.) X
Required information [The following information applies to the questions displayed below.] Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to develop an equation, in the form of Y= a +bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: Month January February March April May June July August September October November December Total Average Hours of Maintenance Service 520 490 300 500 310 480 320 400 470 Monthly maintenance cost= 350 340 320 4,800 400 Maintenance Costs $4,470 4,260 2,820 4,350 2,960 4,200 3,000 3,600 4,050 3,300 3,160 3,030 $43,200 $ 3,600 Required: 1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness, Inc. Express the cost behavior pattern in equation form. (Round coefficient of X to 2 decimal places and other answer to the nearest whole dollar amount.) X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below.]
Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is
accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's
equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to
develop an equation, in the form of Y= a + bX, for maintenance costs. Data regarding the maintenance hours and costs for
last year are as follows:
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Average
Hours of Maintenance
Service
520
490
300
500
310
480
Monthly maintenance cost=
320
400
470
350
340
320
4,800
400
Maintenance
Costs
$ 4,470
4,260
2,820
4,350
2,960
4,200
3,000
3,600
4,050
3,300
3,160
3,030
$43,200
$3,600
Required:
1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness,
Inc. Express the cost behavior pattern in equation form. (Round coefficient of X to 2 decimal places and other answer to the nearest
whole dollar amount.)
X](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fab78be3d-8877-49c6-ad77-a6ffd2f3a5cd%2F316106a2-ca10-4676-ad37-da67fadbe823%2F0p0lhrw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Nation's Capital Fitness, Inc., operates a chain of fitness centers in the Washington, D.C., area. The firm's controller is
accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm's
equipment maintenance costs must be determined. The accounting staff has suggested the use of the high-low method to
develop an equation, in the form of Y= a + bX, for maintenance costs. Data regarding the maintenance hours and costs for
last year are as follows:
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Average
Hours of Maintenance
Service
520
490
300
500
310
480
Monthly maintenance cost=
320
400
470
350
340
320
4,800
400
Maintenance
Costs
$ 4,470
4,260
2,820
4,350
2,960
4,200
3,000
3,600
4,050
3,300
3,160
3,030
$43,200
$3,600
Required:
1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation's Capital Fitness,
Inc. Express the cost behavior pattern in equation form. (Round coefficient of X to 2 decimal places and other answer to the nearest
whole dollar amount.)
X
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