Estimating fixed and variable cost Ubben Computer Services, Inc.

Estimating fixed and variable cost Ubben 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

120

136

260

420

320

330

Revenue

$6,000

$6,800

$13,000

$21,000

$16,000

$16,500

Operating costs

$4,300

$5,300

$7,100

$11,200

$9,100

$10,600

Required.

a. What is the average service revenue per hour for the six-month time period?

b. Use the high-low method to estimate the total monthly fixed cost and the variable cost per hour.

c. Determine the average contribution margin per hour.

d. Use the scattergraph method to estimate the total monthly fixed cost and the variable cost per hour.

e. Compare the results of the two methods and comment on the difference.

 

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