Question 1 - Hitchcock, 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 $7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled $6.40. On the basis of this information, the variable cost per machine hour was:
a. $4.00
b. $6.40
c. $6.70
d. $7.00
e. an amount other than listed
Question 2 - Northridge, Inc., uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled $9.75. On the basis of this information, the company's fixed maintenance costs were:
a. $24,000
b. $90,000
c. $210,000
d. $234,000
e. an amount other than listed