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Felinas Inc. produces floor mats for cars and trucks. The owner, Kenneth Felinas, asked you to assist him in estimating his maintenance costs. Together, Mr. Felinas and you determined that the single best cost driver for maintenance costs was machine hours. Below are data from the previous fiscal year for maintenance expense and machine hours:Month Maintenance Expense Machine Hours1 $ 3,460 2,370 2 3,650 2,470 3 3,830 2,570 4 3,960 2,600 5 3,960 2,450 6 4,360 2,500 7 3,950 2,590 8 3,760 2,560 9 3,480 2,380 10 3,100 2,250 11 2,950 1,660 12 3,220 2,240 Using the high-low method, total monthly fixed cost is calculated to be:Multiple Choice$296.$224.$460.$162.$552.

Respuesta :

jafransp

Answer:

D. $162

Explanation:

We know,

Using high-low method, variable cost per unit = (Highest maintenance expense - Lowest maintenance expense) / (Highest machine hours - Lowest machine hours)

Given,

Highest maintenance expense = $4,360

Lowest maintenance expense = $2,950

Highest machine hours = 2,500 hours

Lowest machine hours = 1,660 hours

Therefore,

Variable cost per unit = $(4360 - 2950)/(2500 - 1660)

Variable cost per unit = 1410/840 = 1.68

Total Fixed cost using lowest machine hours =

Total cost - (variable cost per unit x least machine hours)

= 2,950 - (1.68*1,660)

= $162

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