Slick Mountain Ski Rental Company incurred the following costs and ski rental hours during the following three months of the current year. Assume that the driver for all variable costs is ski rental hours.

Type of cost	December		January		February
Employee cost	$40,000		$55,000		$50,000
Straight-line depreciation on ski lift equipment	6,000		6,000		6,000
Ski inspection (after each usage)	3,500		10,000		9,000
Equipment insurance	1,000		1,000		1,000
Ski rental hours	750		1,180		1,100

Required:

A. Using the high-low method, construct Slick Mountain's cost formula.

Total costs	=	Fixed costs	+	Variable costs
	=	$_________	+	($________per unit × Number of ski rental hours)

B. If Slick Mountain had total costs of $64,000 in March, how many ski rental hours did it incur during March?
fill in the blank 3

C. If Slick Mountain expects to incur 800 ski rental hours in May, what would be the estimate of total cost?
$fill in the blank 4

Answer rating: 100% (QA)

Slick Mountain Ski Rental Company Cost Analysis A Cost Formula using HighLow Method The highlow meth... View the full answer