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Homework answers / question archive / Bell Company has provided the following data for maintenance costs  Machine Hours incurred Maintenance Costs incurred  April May 12,000 16,000 24,000 26,000  Using the high-low method, the cost formula for maintenance costs would be a

Bell Company has provided the following data for maintenance costs  Machine Hours incurred Maintenance Costs incurred  April May 12,000 16,000 24,000 26,000  Using the high-low method, the cost formula for maintenance costs would be a

Accounting

Bell Company has provided the following data for maintenance costs 
Machine Hours incurred Maintenance Costs incurred 
April May 12,000 16,000 24,000 26,000 
Using the high-low method, the cost formula for maintenance costs would be a. $2.00 per machine hour b. $1.625 per machine hour c. $18,000 plus $0.50 per machine hour d. $24,000 plus $0.50 per machine hour 
 

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Change        
      Cost Activity
April     24,000 12,000
May     26,000 16,000
Change     2,000 4,000
         
VC per unit = Change in Cost/ Change in Units
    2000 / 4000 = 0.50 per unit
Total Fixed cost:      
Total cost for 12,000 Hours $24,000   
Less: Variable Cost 12,000*0.50)   6000  
Total Fixed cost:   $18,000   
         
Cost formula for Maintenance cost = $18,000+$0.50x
         
         
         

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