Answer:
$36,000.
Explanation:
The computation of the fixed cost and the variable cost per hour by using high low method is shown below:
Variable cost per hour = (High Machine maintenance costs - low Machine maintenance costs) ÷ (High activity level - low activity level)
= ($52,000 - $20,000) ÷ (60,000 units - 20,000 units)
= $32,000 ÷ 40,000 units
= $0.8
The variable cost equal to
= High activity level × per unit variable cost
= 60,000 units × 0.8
= $48,000
So, the fixed cost would be
= Total cost - variable cost
= $52,000 - $48,000
= $4,000
For 40,000 units, total maintenance cost would be
= Number of units × per unit variable cost + Fixed cost
= 40,000 units × $0.8 + $4,000
= $32,000 + $4,000
=$36,000
