Buckeye Company Has Provided the Following Data for Maintenance Cost

question 87

Multiple Choice

Buckeye Company has provided the following data for maintenance cost:
$\begin{array}{|l|r|r|} \hline& \text { Prior Year } & \text { Current Year } \\\hline \text { Machine Hours } & 12,500 & 15,000 \\\hline \text { Maintenance Cost } & \$ 27,000 & \$ 31,000 \\\hline\end{array}$
Using the high-low method,what is the cost formula for maintenance cost?

• A) $7,000 per year plus $0.625 per machine hour.
• B) $7,000 per year plus $1.60 per machine hour.
• C) $21,625 per year plus $0.625 per machine hour.
• D) $27,000 per year plus $1.60 per machine hour.

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