Retleb Manufacturing Company noticed that,during its busiest month of 2014,maintenance costs totaled $15,400,resulting from the production of 32,000 units.During its slowest month,$12,600 in maintenance costs were incurred,resulting from the production of 24,000 units.Use the high-low method to estimate the maintenance cost that the company will incur if it produces 20,000 units?

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First, calculate the variable cost per unit using the high-low method: $$ \text{Variable Cost per Unit} = \frac{\text{High Cost} - \text{Low Cost}}{\text{High Activity Level} - \text{Low Activity Level}} $$$$ = \frac{15,400 - 12,600}{32,000 - 24,000} = \frac{2,800}{8,000} = 0.35 \text{ per unit} $$Next, calculate the fixed cost:$$ \text{Fixed Cost} = \text{Total Cost} - (\text{Variable Cost per Unit} \times \text{Activity Level}) $$Using the high month for easier calculation:$$ \text{Fixed Cost} = 15,400 - (0.35 \times 32,000) = 15,400 - 11,200 = 4,200 $$Finally, estimate the maintenance cost for 20,000 units:$$ \text{Total Cost} = \text{Fixed Cost} + (\text{Variable Cost per Unit} \times \text{Desired Activity Level}) $$$$ = 4,200 + (0.35 \times 20,000) = 4,200 + 7,000 = 11,200 $$

Retleb Manufacturing Company Noticed That,during Its Busiest Month of 2014,maintenance