Question

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round your answer to the nearest cent.

Cost Machine Hours
March $3,018 15,239
April 2,628 9,504
May 2,857 11,534
June 3,730 18,045
a. $0.86
b. $1.42
c. $0.13
d. $0.90

Answer 1

Variable cost per hour= $0.13

Step-by-step explanation:

Giving the following information:

March $3,018 15,239

April 2,628 9,504

May 2,857 11,534

June 3,730 18,045

To calculate the unitary variable cost under the high-low method, we need to use the following formula:

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

Variable cost per unit= (3,730 - 2,628) / (18,045 - 9,504)

Variable cost per unit= $0.13 per hour