Quickspray Ltd offers professional car spraying services at Suame Magazine. The company is planning its activities for the month of June 2018 for its saloon car spraying section. The company charges service fee of GH¢1,000 and incurs fixed cost (excluding fixed maintenance cost) and variable cost per unit (excluding variable maintenance cost) of GH¢35,000 and GH¢644.39 respectively for spraying of a saloon car.
The following data also relates to Quickspray Ltd on the maintenance hours of its key machine, revenue and profit for the six months ended April 2018.
Total fixed cost increases by GH¢1,120 when maintenance hours go beyond 1,400.
Required:
a) Determine the total maintenance cost of production, using high-low method if;
i) Maintenance hours of May was budgeted to be 1,520.
ii) Maintenance hours of June is budgeted to be 1,075. (10 marks)
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