Song Inc, Uses the High-Low Method to Analyze Cost Behaviour

Multiple Choice

Song Inc., uses the high-low method to analyze cost behaviour. The company observed that at 22,000 machine hours of activity, total maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which is still within the relevant range, the total maintenance costs averaged $30.40 per machine hour. On the basis of this information, the variable cost per machine hour is:

A) $8.40.
B) $22.00.
C) $25.00.
D) $30.40.
E) $33.40.