Answer:
The correct option : B. Cost = $ 130.00 + $ 5.90 x Machine - hours
Explanation:
Let's use the following method to solve the given problem
Now applying the high-low method of cost estimation,
High => November, 5,300 machine hours
Low => March, 2,300 machine hours
Arranging it in a simultaneous equations for total cost:
We can let fixed cost per month to be F, and the variable cost per machine -hour be V, and the number of machine-hours be Q.
Therefore
Total cost = F + VQ
High => F + 5,300Q = $ 31,400
Low => F + 2,300Q = $ 13,700
Subtracting Low from High, we have 3,000Q = $ 17,700 or Q = $ 5.90 per machine hour ................equation one
F = $ 13,700 - ( 2,300 x $ 5.90) = $ 130......................................................................equation two
