Northridge Inc., uses the high-low method to analyze cost behaviour. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which is still within the relevant range, the total maintenance costs averaged $9.75 per machine hour. On the basis of this information, the company's fixed maintenance costs are:
A)$20,000.
B)$24,000.
C)$90,000.
D)$210,000.
E)$234,000.

Question

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The Answer of Northridge Inc., uses the high-low method to analyze cost behaviour. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which is still within the relevant range, the total maintenance costs averaged $9.75 per machine hour. On the basis of this information, the company's fixed maintenance costs are:
A)$20,000.
B)$24,000.
C)$90,000.
D)$210,000.
E)$234,000.