Hifi Company Wants to Develop a Cost Function for Its

question 1

Multiple Choice

Hifi Company wants to develop a cost function for its maintenance costs to estimate such costs for the coming year. The following data are available: $$\begin{array} { | l | l | l | } \hline \text { Manth } & \text { Machine Hours } & \begin{array} { l } \text { Maintenance Costs } \\\text { Incurred }\end{array} \\\hline \text { January } & \mathbf { 8 0 0 0 } & \mathbf { \$ 3 , 6 0 0 } \\\hline \text { February } & 13000 & \$ 5,300 \\\hline \text { March } & 14000 & \$ 6,000 \\\hline \text { April } & 11000 & \$ 4,600 \\\hline\end{array}$$ Using the high-low method, what is the fixed maintenance cost?

• A) $400
• B) $3,200
• C) $200
• D) $1,800

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