Question

Kicks corporation sells running shoes and during janurary they ran production machines for 20000 total hours and incurred 9000 in maintence costs. during july they ran production machines for 14000 total hours and incurred 7200 in maintenance costs. based on this data what is the variable maintenance cost per machine hour?

Answer 1

Answer:

$0.3 per machine hour

Explanation:

The computation of the variable maintenance cost per machine hour using the high low method is shown below:

Variable cost per machine hour = (High maintenance cost - low maintenance  cost) ÷ (High machine hours - low machine hours)

= ($9,000 - $7,200) ÷ (20,000 machine hours - 14,000 machine hours)

= $1,800 ÷ 6,000 machine hours

= $0.3 per machine hour