The White Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. White Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.

What is the estimated total cost at an operating level of 3,400 hours?
A) $70,750
B) $39,800
C) $37,400
D) $37,725

Question

The White Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. White Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.

What is the estimated total cost at an operating level of 3,400 hours?

What is the estimated total cost at an operating level of 3,400 hours?
A) $70,750 
B) $39,800 
C) $37,400 
D) $37,725

Quizplus · Accepted Answer

b = ($68,400 - $37,600) / (6,000 - 3,200) = $11.00
$68,400 = a + ($11.00 × $6,000)
a = $2,400
y = $2,400 + ($11.00 × 3,400) = $39,800

The White Company Has Assembled the Following Data Pertaining to Certain