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Using the high-low method, the estimated variable cost per machine hour for utilities is:__________.

a) $2.50.
b) $6.00.
c) $3.38.
d) $6.17.
e) $4.22.

User Ferpega
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Question Completion:

The following information is available for a company's utility cost for operating its machines over the last four months.

Month Machine hours Utility cost

January 900 $5,450

February 1,800 $6,900

March 2,400 $8,100

April 600 $3,600

Answer:

Using the high-low method, the estimated variable cost per machine hour for utilities is:__________.

a) $2.50.

Step-by-step explanation:

a) Data and Calculations:

Month Machine hours Utility cost

January 900 $5,450

February 1,800 $6,900

March 2,400 $8,100

April 600 $3,600

b) Highest and Lowest:

Month Machine hours Utility cost

March 2,400 $8,100

April 600 $3,600

Differences 1,800 $4,500

Estimated variable cost = $4,500/1,800 = $2.50

User Nirajan Singh
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