At an activity level of 9,000 machine-hours in a month, Moffatt Corporation's total variable maintenance cost is $390,240 and its total fixed maintenance cost is $368,280.What would be the total variable maintenance cost at an activity level of 9,300 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)
A) $758,520
B) $403,248
C) $390,240
D) $380,556

Question

Quizplus · Accepted Answer

Using the high-low method:

Variable cost per machine-hour = (Total cost at high activity level - Total cost at low activity level) / (High activity level - Low activity level)

Variable cost per machine-hour = ($390,240 - $368,280) / (9,000 – 0) = $21.82

Total variable maintenance cost at 9,300 machine-hours = (Variable cost per machine-hour x 9,300) + Total fixed maintenance cost

Total variable maintenance cost = ($21.82 x 9,300) + $368,280 = $403,248

Therefore, the total variable maintenance cost at an activity level of 9,300 machine-hours in a month would be $403,248, which is option B.

At an Activity Level of 9,000 Machine-Hours in a Month