On the basis of this information,what were total maintenance costs when the company experienced 23,000 machine hours?
A)$193,200.
B)$550,000.
C)$734,800.
D)$743,200.
E)$760,000.

Question

Quizplus · Accepted Answer

Using the high-low method, we can calculate the variable cost per machine hour as follows:

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 = ($710,000 – $440,000) / (24,000 – 16,000) = $45

Then, we can use this information to find the total maintenance cost at 23,000 machine hours:

Total maintenance cost = Fixed cost + (Variable cost per machine hour x Number of machine hours)

Total maintenance cost = $617,000 + ($45 x 23,000) = $743,200

Therefore, the correct answer is D)$743,200.

On the Basis of This Information,what Were Total Maintenance Costs