Question
Arcadia Company incurred the following costs and machine hours during the first three months of the current year. Assume that the driver for all costs
Arcadia Company incurred the following costs and machine hours during the first three months of the current year. Assume that the driver for all costs is machine hours.
| Type of cost | January | February | March |
| Electricity | $20,000 | $15,000 | $18,000 |
| Depreciation | 15,000 | 15,000 | 15,000 |
| Factory supplies | 9,600 | 5,600 | 7,600 |
| Property taxes | 12,000 | 12,000 | 12,000 |
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| Machine hours | 1,200 | 700 | 950 |
Required:
| A. | Using the high-low method, construct a cost formula for electricity cost. |
| B. | If Arcadia had total costs in April of $53,000, how many machine hours did they incur during April? |
| C. | If Arcadia expects to incur 1,500 machine hours in May what would be the estimate of their total costs? |
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