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Found in: Page 833

### Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

# The following information is available for a company’s maintenance cost over the last seven months. Using the high-low method, estimate both the fixed and variable components of its maintenance cost.MonthMaintenance hoursMaintenance costJune 9$5,450July 186,900August125,100September156,000October216,900November248,100December63,600 Answer Variable component:$250 per hour.

Fixed component: \$2,100 per month.

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## Step-By-Step SolutionStep 1: Definition of High-Low Method

The method under which the highest activity and lowest activity are compared with the highest activity cost and lowest activity cost to classify the variable and fixed components of the total cost is known as the high-low method.