Exhibit 5-4
Wayside Company has machine hours of 5,000 and machine costs of $170,000 at the high data point.Machine hours are 2,000 and machine costs are $110,000 at the low data point.Wayside uses the high-low method to estimate costs.
-Refer to Exhibit 5-4.What is the estimated cost per machine hour?
A)$34
B)$55
C)$20
D)$40
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The estimated cost per machine hour is calculated using the high-low method: (High cost - Low cost) / (High hours - Low hours) = ($170,000 - $110,000) / (5,000 - 2,000) = $60,000 / 3,000 = $20 per machine hour.

Exhibit 5-4 Wayside Company Has Machine Hours of 5,000 and Machine Costs