Answer the following questions using the information below:
For Echuca Company,labour-hours are 50 000 and wages $188 000 at the high point of the relevant range,and labour-hours are 30 000 and wages $140 000 at the low point of the relevant range.
-What is the estimate of total labour costs at Echuca Company when 40 000 labour-hours are used?
A)$208 000
B)$164 000
C)$68 000
D)$184 668

Question

Quizplus · Accepted Answer

The variable cost per labour-hour is ($188,000 - $140,000) / (50,000 - 30,000) = $2.40. The fixed cost is $188,000 - (50,000 * $2.40) = $68,000. For 40,000 hours, total cost = $68,000 + (40,000 * $2.40) = $164,000.

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