Liva Company wants to develop a cost function for its maintenance costs to estimate such costs for the

coming year.

The following data are available:

Direct

Maintenance

Month

Labor Hours

Costs Incurred

January

4,000

$

900

February

6,500

1,325

March

7,000

1,500

April

5,500

1,150

30

23

.

Using the high-low method, what is the variable maintenance cost per direct labor hour?

a.

$1.00

b.

$0.10

c.

$0.20

d.

$1.50

31

24

.

Using the high-low method, what is the fixed maintenance cost?