At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600.Using the high-low method,the cost formula for maintenance is?
A) $1.16 per unit.
B) $1.20 per unit.
C) $600 plus $1.10 per unit.
D) $1,200 plus $1.10 per unit.

Question

Quizplus · Accepted Answer

The variable cost per unit is (11,600 - 7,200) / (10,000 - 6,000) = $1.10. The fixed cost is $7,200 - (1.10 * 6,000) = $600. Therefore, the cost formula for maintenance is $600 plus $1.10 per unit.

At an Activity Level of 6,000 Units the Cost for Maintenance