The following data relate to the Torrence Company for May and August:

-
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?
A) The variable maintenance cost is $18 per hour.
B) The variable maintenance cost is $22 per hour.
C) The variable maintenance cost is $24 per hour.
D) The fixed maintenance cost is $72,000 per month.
E) More than one of the other answers is true.

Question

The following data relate to the Torrence Company for May and August:

-
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?
A) The variable maintenance cost is $18 per hour. 
B) The variable maintenance cost is $22 per hour. 
C) The variable maintenance cost is $24 per hour. 
D) The fixed maintenance cost is $72,000 per month. 
E) More than one of the other answers is true.

Quizplus · Accepted Answer

The Answer of The following data relate to the Torrence Company for May and August:

-
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?
A) The variable maintenance cost is $18 per hour. 
B) The variable maintenance cost is $22 per hour. 
C) The variable maintenance cost is $24 per hour. 
D) The fixed maintenance cost is $72,000 per month. 
E) More than one of the other answers is true.

The Following Data Relate to the Torrence Company for May