Question

The following information is available for a company's utility cost the estimated variable cost per machine hour is:_____.

Month Machine hours Utility cost
January 950 $5,500
February 1,850 $7,000
March 2,500 $8,100
April 650 $3,420

Answer 1

Variable cost per unit= $2.53

Step-by-step explanation:

Giving the following information:

Month Machine hours Utility cost

January 950 $5,500

February 1,850 $7,000

March 2,500 $8,100

April 650 $3,420

To calculate the unitary cost per machine hour, we need to use the high-low method:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (8,100 - 3,420) / (2,500 - 650)

Variable cost per unit= $2.53