In applying the high-low method, what is the fixed cost? $\begin{array}{llr}\text { Month}&\text { Miles }&\text {Total Cost }\
\hline \text { January } & \overline{80,000} & \$ 144,000 \
\text { February } & 50,000 & 120,000 \
\text { March } & 70,000 & 141,000 \
\text { April } & 90,000 & 195,000
\end{array}$
A)$26,250
B)$54,000
C)$21,000
D)$75,000

Question

Quizplus · Accepted Answer

The fixed cost is the cost that remains constant regardless of the level of activity. In this case, the fixed cost is $26,250. This can be calculated by taking the difference between the total cost at the highest level of activity and the total cost at the lowest level of activity, and then dividing by the difference in activity levels.

In Applying the High-Low Method, What Is the Fixed Cost