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Song Inc, Uses the High-Low Method to Analyze Cost Behaviour

question 63

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Song Inc., uses the high-low method to analyze cost behaviour. 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 is still within the relevant range, the total maintenance costs averaged $30.40 per machine hour. On the basis of this information, the variable cost per machine hour is:

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Definitions:

Relative Strength

A measure in technical analysis indicating the performance of a stock or security compared to a market index or other securities over a period.

Differentiation

A strategy businesses use to distinguish their products or services from those of competitors, often through unique features, quality, or brand image.

Competitive Advertising

A marketing strategy where a company promotes its product by comparing it with similar products of competitors.

Target Market

A specific group of consumers identified as the recipients of a particular marketing campaign or strategy, based on shared characteristics or needs.

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