Using the High-Low Method, If the Highest Maintenance Cost and Machine

question 11

Multiple Choice

Using the high-low method, if the highest maintenance cost and machine hours are $40 000 and 12 000 hours respectively and the lowest maintenance cost and machine hours are $20 000 and 8 000 hours respectively, the variable maintenance costs per machine hour are:

• A) $3.33
• B) $5.00
• C) $2.50
• D) $3.00

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Definitions:

Investment Center

A division or unit within an organization that is responsible for generating its own revenue and controlling its costs, allowing it to be evaluated as a standalone entity for performance assessment.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales or revenue; calculated as sales divided by the average investment in assets.

Profit Margin

A financial metric used to evaluate a company's financial health by dividing net income by net sales, expressed as a percentage.

Direct Expenses

Expenses that can be directly attributed to a specific cost object, such as a product, department, or project.