Slick Mountain Ski Rental Company incurred the following costs and ski rental hours during the following three
Question:
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
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher