Millco Inc. manufactures electronic parts They are analyzing their monthly maintenance costs to determine the best way to budget these costs in the future. They have collected the following data for the last six months:
 
Months           Machine Hours    Maintenance Costs
January                 30,000                 $67,500
February               40,000                   74,500
March                    37,500                  65,900
April                      39,000                   68,750
May                       42,300                  74,000
June                     35,000                   64,500
Answer:
Millco Inc. 
The approximate fixed cost component of the monthly maintenance costs is:
$51,600.
Explanation:
a) Data and Calculations:
Months           Machine Hours    Maintenance Costs
January                 30,000                  $67,500
February               40,000                    74,500
March                    37,500                   65,900
April                      39,000                    68,750
May                      42,300                   74,000
June                     35,000                   64,500
High-low:
May                       42,300                  $74,000 for highest
January                30,000                    67,500 for lowest
Difference            12,300                    $6,500
Variable costs = $0.53 ($6,500/12,300)
Using May, the total variable cost = 42,300 * $0.53 = $22,419
Fixed cost = $51,581 ($74,000 - $22,419)
or approximately $51,600