The following data has been assembled for Zowie Company. Use the high- low method. $$\begin{array} { l l }
\text { Cost } & \text { Hours } \
\$ 24,400 & 2,000 \
34,000 & 2,600 \
31,280 & 2,450 \
36,400 & 3,000 \
44,160 & 3,900
\end{array}$$ The total cost at an operating level of 2,850 hours is:
A) $25,692
B) $34,736
C) $32,016
D) $33,240

Question

The following data has been assembled for Zowie Company. Use the high- low method. $$\begin{array} { l l } 
\text { Cost } & \text { Hours } \
\$ 24,400 & 2,000 \
34,000 & 2,600 \
31,280 & 2,450 \
36,400 & 3,000 \
44,160 & 3,900
\end{array}$$ The total cost at an operating level of 2,850 hours is:
A) $25,692
B) $34,736
C) $32,016
D) $33,240

Quizplus · Accepted Answer

Using the high-low method, the variable cost per hour is calculated as (44,160 - 24,400) / (3,900 - 2,000) = $10.40. The fixed cost is then calculated using one of the points, for example, 44,160 - (10.40 * 3,900) = $3,600. The total cost at 2,850 hours is 3,600 + (10.40 * 2,850) = $33,240.

The Following Data Has Been Assembled for Zowie Company The Total Cost at an Operating Level of 2,850 Hours