The following data pertains to activity and maintenance cost for two recent periods: Maintenance cost is a mixed cost with both fixed and variable components. Using the high-low method, the cost formula for maintenance cost is: (Round your intermediate calculations to 2 decimal places.)
A) Y = $4.25 X
B) Y = $14,000 + $2.50 X
C) Y = $2,500 + $4.25 X
D) Y = $4.50 X

Question

The following data pertains to activity and maintenance cost for two recent periods:  Maintenance cost is a mixed cost with both fixed and variable components. Using the high-low method, the cost formula for maintenance cost is: (Round your intermediate calculations to 2 decimal places.)
A) Y = $4.25 X 
B) Y = $14,000 + $2.50 X 
C) Y = $2,500 + $4.25 X 
D) Y = $4.50 X

Quizplus · Accepted Answer

11eacbfc_c8ab_2e2c_8ffe_f3719760e270_TB7552_00 Variable cost per unit = Change in cost ÷ Change in activity
= $2,500 ÷ 1,000 units
= $2.50 per unit
Fixed cost = Total cost − Variable cost element
= $34,000 − ($2.50 per unit × 8,000 units)
= $34,000 − $20,000
= $14,000

The Following Data Pertains to Activity and Maintenance Cost for Two