Prince Albert Company Makes Cross-Country Skis

Essay

Prince Albert Company makes cross-country skis. The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory. Data for the past six months were collected.
Janitorial Labour
Month cost hours
January $9,200 10,120
February 8,800 9,500
March 9,350 10,500
April 9,620 11,100
May 8,400 8,660
June 9,400 10,650
Required:
A. Using the high-low method, calculate the variable rate of the janitorial cost.
B. Using the high-low method, calculate the fixed cost of janitorial services.
C. Calculate the estimated janitorial cost to be incurred during the next six months assuming that 58,200 labour hours will be worked.