Question

In the Restin Company, maintenance costs are a mixed cost. At the low level of activity (80 direct labor hours), maintenance costs are $600. At the high level of activity (200 direct labor hours), maintenance costs are $1,100. Using the high-low method, what is the variable maintenance cost per unit and the total fixed maintenance cost

Answer 1

the variable maintenance cost per unit and the total fixed maintenance cost is $4.17 per unit and $267 respectively

Step-by-step explanation:

The computation of the variable maintenance cost per unit and the total fixed maintenance cost is shown below:

The variable maintenance cost is

= ($1100 - $600) ÷ (200 - 80)

= $4.17 per unit

And, the fixed maintenance cost is

= $1,100 - $4.17 × $200

= $267

Hence, the variable maintenance cost per unit and the total fixed maintenance cost is $4.17 per unit and $267 respectively