Martina Stemmler, president of Evert Tool Co., has asked for information about the cost behaviour of manufacturing support costs. Specifically, she wants to know how much support cost is fixed and how much is variable. The following data are the only records available:

1. Find monthly fixed support cost and the variable support cost per machine-hour by the high-low method.

2. Explain how your analysis for requirement 1 would change if new October data were received and machine-hours were 1,700 and support costs were $15,800.

3. A least-squares regression analysis gave the following output: Regression equation: Y=$3,355+$6.10X

What recommendations would you give the president based on these analyses?

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Month Machine-Hours Support Costs $ 9,000 May 850 June 1,300 12,500 July 1,000 7,900 11,400 August 1,250 September 1,750 13,500