Rooney Computer Services, Inc. has been in business for six months. The following are basic operating data for that period: Month July Aug. Sept. Oct. Nov. Dec. Service hours 112 136 262 420 316 324 Revenue $ 6,608 $ 8,024 $ 15,458 $ 24,780 $ 18,644 $ 19,116 Operating costs $ 4,210 $ 5,240 $ 7,190 $ 11,130 $ 9,130 $ 10,590 Required What is the average service revenue per hour in each month and the overall average for the six-month period? Use the high-low method to estimate the total monthly fixed cost and the variable cost per hour. Determine the average contribution margin per hour.

The total monthly fixed cost and the variable cost per hour is $1692.60 and $22.47

the average contribution margin per hour is $36.53

Explanation:

The computation of the variable cost and fixed cost is shown below:

The computation of the variable cost per unit is shown below:

= (High operating cost - low operating cost) : (High service hours - low service hours)

= ($11,130 - $4,210) : (420 - 112)

= $6,920 : 308

= $22.47

And, the fixed cost equals to

= High operating cost - (High service hours * variable cost per hour)

= $11,130 - (420 * $22.47)

= $11,130 - $9437.40

= $1692.60

And the average contribution margin per hour equals to

= Revenue per hour - variable cost per hour

= $59 - $22.47

= $36.53

The revenue per hour = Revenue : service hours = $6,608 : 112 = $59