Use the information below to answer the following question(s).At the high point of the relevant range, labour hours at Bradco Restoration were 10,000 and wages were $22,500.At the low point of the relevant range, labour hours were 7,500 and wages were $17,500.
-What is the high-low estimate of the labour costs at Bradco Restoration when 8,000 hours are used?
A)$21,500
B)$18,500
C)$17,750
D)$17,250
E)$17,125

Question

Quizplus · Accepted Answer

The high-low method calculates the variable cost per hour as ($22,500 - $17,500) / (10,000 - 7,500) = $2 per hour. Fixed costs are $22,500 - (10,000 * $2) = $2,500. For 8,000 hours, total cost = (8,000 * $2) + $2,500 = $18,500.

Use the Information Below to Answer the Following Question(s)