Final answer:
Using the high-low method, the expected total cost at an operating level of 1,900 hours is estimated to be $23,620 after calculating the variable cost per hour ($7.80) and fixed cost ($8,800). However, this value is not listed among the answer choices, indicating a possible discrepancy in the provided data or question options.
Step-by-step explanation:
To use the high-low method to estimate the expected total cost at an operating level of 1,900 hours for John Company, we need to identify the months with the highest and lowest number of hours worked to determine the variable cost per hour. The highest is May with 4,000 hours and $40,000 cost, and the lowest is January with 2,000 hours and $24,400 cost. Applying the high-low method, the variable cost per hour is calculated as:
Variable Cost per hour = (Cost at high activity level - Cost at low activity level) / (High activity level - Low activity level)
Variable Cost per hour = ($40,000 - $24,400) / (4,000 hours - 2,000 hours) = $15,600 / 2,000 hours = $7.80
Next, we need to calculate the fixed cost by using either the high or low point:
Fixed Cost = Total Cost - (Variable Cost per hour × Activity level)
Fixed Cost at low activity level (January) = $24,400 - ($7.80 × 2,000 hours) = $24,400 - $15,600 = $8,800
Now, we can estimate the expected total cost at an operating level of 1,900 hours:
Expected Total Cost = Fixed Cost + (Variable Cost per hour × Desired Activity level)
Expected Total Cost = $8,800 + ($7.80 × 1,900 hours) = $8,800 + $14,820 = $23,620
However, this value is not an option provided in the question. There may be a discrepancy, so it's advisable to verify the details before proceeding.