The following information is available for Alba Company's maintenance cost over the last four months.MonthMaintenance hoursMaintenance costJanuary150$6,000February120$5,100March240$8,100April210$6,900Use the high-low method to estimate both the fixed and variable component of its maintenance cost.
What will be an ideal response?
Variable cost per unit = Change in cost/change in units (using highest and lowest level of activity)
($8,100 - $5,100)/(240 - 120) = $25 per unit
Fixed cost = Total high (low) cost - (variable cost per unit ? high (low) hours)
$8,100 - ($25 ? 240) = $2,100
OR $5,100 - ($25 ? 120) = $2,100
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