Using the highlow method, what would the total maintenance costs be if machine hours were used? (Round any intermediary calculations to the nearest cent.)

Hi, the question you posted was incomplete, however, i have searched the full question and it reads as follows :

Maintenance costs at Seaside Manufacturing over the past six months are listed in the following table.

Month

Maintenance cost

Machine

hours

January

?$13,600

?15,500

February

?$14,720

?16,900

March

$13,000

14,000

April

?$14,480

?16,600

May

$16,000

18,000

June

?$13,200

?15,000

Using the  high low  method, what would the total maintenance costs be if  17,800  machine hours were? used? (Round any intermediary calculations to the nearest? cent.)

A. $15,850

B. $31,350

C. $13,350

D. $ 2650

A.  $15,850

Explanation:

The High Low Method, is used to separate variable and fixed cost element in a semi-variable cost. The Maintenance cost is a semi-variable cost with both a variable and a fixed cost element.

So, first identify the 2 points. That is the high and the low

May is the High

March is the Low

Next, determine the variable cost per unit :

Variable Cost = Difference in Overhead Cost between the High and the Low ÷ Difference in the Independent Variable between the High and the Low

Therefore,

Variable Cost = ($16,000 - $13,000) ÷ (18,000 - 14,000)

                        = $0.75 per machine hour

Next, find the fixed cost element

Fixed Cost = Total Overheads - Variable Cost at Chosen Point

I will choose the High point !

Therefore,

Fixed Cost = $16,000 - ($0.75 × 18,000)

                  = $2,500

Now, we have our equation as

Total Costs =  $2,500 + $0.75 × machine hours

So to find the total costs if 17,800  machine hours were used, we simply need to apply the equation as follows :

Total Costs =  $2,500 + $0.75 × machine hours

Therefore,

Total Costs = $2,500 + $0.75 × 17,800

                   = $15,850

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