Use the Following Information to Answer the Following QuestionsSwan, Inc

question 56

Multiple Choice

Use the following information to answer the following QuestionsSwan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $30.40.
-On the basis of this information, the fixed cost for Swan was:

• A) $184,800.
• B) $210,000.
• C) $550,000.
• D) $734,800.
• E) $760,000.

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Definitions:

Direct Labor Cost

Expenses that are directly associated with the labor used in producing goods or services, including wages for workers who physically manufacture a product.

Estimated Overhead

The approximated costs of all overhead expenses expected to be incurred during a specified period, necessary for maintaining operations.

Raw Materials Purchased

This term refers to the total cost or expenditure on raw materials that have been bought for use in production during a specific period.

Work in Process Inventory

Inventory representing the cost of unfinished goods being produced, including materials, labor, and overhead expenses.