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Unformatted text preview: ent days = 800
LO 2 634 The Scattergraph Method
Make a quick estimate of variable cost per unit and
Make a quick estimate of variable cost per unit and
Make
determine the cost equation.
determine the cost equation.
Total maintenance at 800 patients
Less: Fixed cost
Estimated total variable cost for 800 patients Variable cost per unit = $1,000
800 $ 11,000
10,000
$ 1,000 = $1.25/patientday Y = $10,000 + $1.25X
Total maintenance cost
Total Number of patient days
LO 2 635 The HighLow Method
Assume the following hours of maintenance work
and the total maintenance costs for six months. LO 2 636 The HighLow Method
The variable cost
The
per hour of
per
maintenance is
equal to the change
in cost divided by
the change in hours.
the
$2,400
= $8.00/hour
$8.00/hour
300 LO 2 637 The HighLow Method Total Fixed Cost = Total Cost – Total Variable Cost
Total Fixed Cost = $9,800 – ($8/hour × 800 hours)
Total Fixed Cost = $9,800 – $6,400
Total Fixed Cost = $3,400
LO 2 638 The HighLow Method The Cost Equation for Maintenance Y = $3,400 + $8.00X
LO 2 639 Quick Check Sales salaries and commissions are $10,000
Sales salaries and commissions are $10,000
when 80,000 units are sold, and $14,000 when
when 80,000 unit...
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This note was uploaded on 01/27/2014 for the course ADM 2341 taught by Professor Managerialaccounting during the Winter '07 term at University of Ottawa.
 Winter '07
 ManagerialAccounting

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