Estimating fixed and variable costs Berger Legal Services provides legal advice to clients.

Estimating fixed and variable costs Berger Legal Services provides legal advice to clients. The following data apply to the first six months of operation.

Month 

Jan.

Feb.

Mar.

Apr.

May

June

Service hours

50

80

125

140

170

195

Revenue

$4,000

$6,400

$10,000

$11,200

$13,600

$15,600

Operating costs

6,200

7,100

8,380

8,500

8,761

9,680

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 scatter graph 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 any differences.

 

 

 

 

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