The following data relate to the Torrence Company for May and August: May AugustMaintenance hours 25,000 29,000 Maintenance cost$1,175,000 $1,247,000 May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?
A. The fixed maintenance cost is $72,000 per month.
B. The variable maintenance cost is $18 per hour.
C. The variable maintenance cost is $22 per hour.
D. The variable maintenance cost is $24 per hour.
E. More than one of the other answers is true.
Answer: B
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