Question

A company incurred $12,000 of maintenance cost for 6,500 machine hours in June and $14,250 of maintenance costs for 8,000 hours in August. Assuming these are the high and low months of activity, the estimated fixed maintenance costs using the high-low method is $

Answer 1

The estimated fixed maintenance costs of the company using the high-low method is $2,250.

Data and Calculations:

                                                   June          August   Difference

Maintenance cost incurred  $12,000       $14,250    $2,250

Machine hours                          6,500          8,000       1,500

Variable cost = $1.50 ($2,250/1,500)

Fixed cost (using June) = $2,250 ($12,000 - (6,500 x $1.50)

Fixed cost (using August) = $2,250 ($14,250 - (8,000 x $1.50)

Thus, the fixed maintenance costs of the company using the high-low method is $2,250.

Learn more about the high-low method at https://brainly.com/question/14107176