Estimated total cost at an operating level of 9,000 hours will be $38,200.
<h3><u>SOLUTION: -</u></h3>
As per high low method
Variable cost = Change in cost / Change in hours = (High cost - Low cost) / (High hours - Low hours).
Variable cost = $19,000 / 5,000
= $3.80 per hour
Fixed cost = Total cost - variable cost
= $23,000 - ( $3.80 × 5,000 )
= $23,000 - $19,000
= $4,000
Estimated total cost at an operating level of 9,000 hours
Fixed cost + Variable cost
= $4,000 + ( $3.80 × 9,000 hours)
= $4,000 + $34,200
= $38,200
Therefore, Estimated total cost at an operating level of 9,000 hours is = $38,200.
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Correct Question - The Connors Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Connors Company has heard about a method of measuring cost functions called the high−low method and has decided to use it in this situation.
Cost Hours
$24,360 5,800
$26,500 6,100
$34,800 7,850
$42,360 13,000
$38,800 9,400
What is the Estimated total cost at an operating level of 9,000 hours?
