In the Restin Company maintenance costs are a mixed cost. At the low level of activity (80 direct labor hours) maintenance costs are $600. At the high level of activity (200 direct labor hours) maintenance costs are $1100. Using the high-low method what is the variable maintenance cost per unit and the total fixed maintenance cost? $\begin{array}{cc}\text{ Variable Cost Per Unit }& \text{ Total Fixed Cost }\end{array}$
A) $\begin{array}{cccccccccc}& & \$4.17& & & & & & & \$267\end{array}$
B) $\begin{array}{cccccccccc}& & \$4.17& & & & & & & \$500\end{array}$
C) $\begin{array}{cccccccccc}& & \$5.50& & & & & & & \$220\end{array}$
D) $\begin{array}{cccccccccc}& & \$5.50& & & & & & & \$400\end{array}$

High-Low Method

An accounting method used to estimate the fixed and variable components of a cost based on the highest and lowest levels of activity.

Variable Maintenance Cost

Costs that change in proportion to the operational activity of a company, such as repairs and maintenance expenses that vary with usage.

Mixed Cost

A cost containing both variable and fixed cost elements, changing in total with activity level but not proportionately.