Question

Swan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $37.30 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $31.30.

Answer 1

7.3

Step-by-step explanation:

37.30 × 20,000 = $746,000

31.30× 25000 =$782,500

$746,000-$782,500 = $36,500

36,500/ 5,000 = 7.3

Note:

25,000-20 000= 5,000