Hilby, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this information, the variable cost per machine hour was: a. P4.00. b. P6.40. c. P6.70. d. P7.00.
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Choose the letter of answer:
Hilby, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this information, the variable cost per machine hour was:
a. P4.00.
b. P6.40.
c. P6.70.
d. P7.00.
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