Answer:
Results are below.
Explanation:
<u>First, we need to calculate the total cost for each activity level:</u>
High activity level= 27,000*27.3= $737,100
Low activity level= 23,000*34.3= $788,900
<u>Now, using the high-low method, we can determine the variable and fixed costs:</u>
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (788,900 - 737,100) / (27,000 - 23,000)
Variable cost per unit= $12.95 per machine-hour
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 788,900 - (12.95*27,000)
Fixed costs= $439,250
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 737,100 - (12.95*23,000)
Fixed costs= $439,250
<u>Finally, for 25,000 hours:</u>
Total cost= 439,250 + 12.95*2,5000
Total cost= $763,000
