Question
RR Company uses the high-low method to analyze cost behavior. The company observed that at 2,000 machine hours of sctivity, total maintenance costs averaged P40.00
RR Company uses the high-low method to analyze cost behavior. The company observed that at 2,000 machine hours of sctivity, total maintenance costs averaged P40.00 per hour. When activity jumped to 6,000 machine hours, the average cost per machine hour totaled P35. If thr number of machine hours would exceed 5,000, fixed cost would increase by P20,000. On the other hand, if it will be below 1,000 machine hours, fixed cost would decrease by P10,000. But, regardless of the number of machine hours, variable cost per unit remains constant.
1. If RR plans to incur 5,300 machine hours, the total cost would be?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started