Use the information below to answer the following question(s).At the high point of the relevant range, labour hours at Bradco Restoration were 10,000 and wages were $22,500.At the low point of the relevant range, labour hours were 7,500 and wages were $17,500.
-Using the high-low method determine the constant at Bradco Restoration?
A)$17,500
B)$13,750
C)$2,500
D)$1,250
E)$750

Question

Quizplus · Accepted Answer

The constant (fixed cost) is calculated using the high-low method by first determining the variable cost per unit and then using it to find the fixed cost. The variable cost per hour is ($22,500 - $17,500) / (10,000 - 7,500) = $2 per hour. The fixed cost is then calculated as $22,500 - ($2 * 10,000) = $2,500.

Use the Information Below to Answer the Following Question(s)