Larker Brothers, Incorporated, Used the High-Low Method to Derive Its

question 367

Multiple Choice

Larker Brothers, Incorporated, used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $4 per machine-hour. Total electrical power cost at the high level of activity was $19,200 and at the low level of activity was $18,400. If the high level of activity was 3,300 machine hours, then the low level of activity was:

• A) 3,100 machine hours
• B) 3,200 machine hours
• C) 3,000 machine hours
• D) 2,900 machine hours

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