Answer:
The correct answer is C.
Explanation:
Giving the following information:
Cost - Machine Hours
January: $26,300 - 10,000
February: $36,700 - 18,400
March: $28,400 - 12,400
April: $31,400 - 14,900
Using the high-low method, first, we need to calculate the variable cost per unit. We need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (36,700 - 26,300) / (18,400 - 10,000)
Variable cost per unit= $1.2381 per unit
Now, we can calculate the fixed costs:
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 36,700 - (1.2381*18,400)= 13,918.96= $13,919
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 26,300 - (1.2381*10,000)= $13,919
