Marigold corp.’s high and low level of activity last year was 57000 units of product produced in may and 11000 units produced in november. machine maintenance costs were $175600 in may and $46800 in november. using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 4 units. a. $67,500 b. $72,000 c. $58,500 d. $60,000

The answer is: expected maintenance cost $112,000

Explanation:

The high-low costing method uses the following formula:

maintenance cost per unit = (highest activity cost - lowest activity cost) / (highest activity units - lowest activity units)

If the company is planning to produce 40,000 units, their total expected maintenance cost should be = 40,000 units x $2.80 per unit = $112,000

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