1 answer

Fanning Computer Services, Inc. has been in business for six months. The following are basic operating...

Question:

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

Fanning Computer Services, Inc. has been in business for six months. The following are basic operating data for that period: 3333333 Service hours Revenue Operating costs July 114 $6,726 $ 4,240 Aug. 136 $ 8,024 $5,260 Month Sept. Oct. 258 428 $15, 222 $25, 252 $ 7,150 $11,140 Nov. 314 $18,526 $ 9,170 Dec. 326 $19,234 $10,560 Required a. What is the average service revenue per hour in each month and the overall average for the six-month 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.

Answers

a
July Aug. Sept. Oct. Nov. Dec. Total Average
Revenue 6726 8024 15222 25252 18526 19234 92984
Divide by Service hours 114 136 258 428 314 326 1576
Average service Revenue per hour 59.00 59.00 59.00 59.00 59.00 59.00 59.00
b
Operating costs Service hours
High level 11140 428
Low level 4240 114
Difference 6900 314
Variable cost 21.97 per hour =6900/314
Fixed cost 1737 or 1735 per month =11140-(428*21.97)
c
Average contribution margin per hour 37.03 =59.00-21.97
.

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