Question

# In the Bonita, maintenance costs are a mixed cost. At the low level of activity (100...

In the Bonita, maintenance costs are a mixed cost. At the low level of activity (100 direct labor hours), maintenance costs are \$1200. At the high level of activity (400 direct labor hours), maintenance costs are \$2200. Using the high-low method, what is the variable maintenance cost per unit and the total fixed maintenance cost?

 Variable Cost Per Unit Total Fixed Cost
 \$3.33 \$1000
 \$3.33 \$868
 \$5.50 \$275
 \$5.50 \$2600

*HAC = Highest Activity Cost ( \$2,200 )

LAC = Lowest Activity Cost ( \$1,200 )

HAU = Highest Activity Units ( 400 )

LAU = Lowest Activity Units. ( 100 )

High - low method :

1. Variable Cost per unit ( VCU ):

=> ( HAC - LAC) / ( HAU - LAU)

=> ( \$2,200 - \$1,200 ) / ( 400 - 100 )

=> \$1,000 / 300

=> \$3.33

2.​​​​ Total Fixed Cost ( TFC ) :

=> HAC - ( VCU x HAU )

=> \$2,200 - ( \$3.33 x 400 )

=> \$2,200 - \$1,332

=> \$868

_ _ _ x _ _ _

ALL THE BEST

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