Question
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost. The company's relevant
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:
Month | Utilities | Machine Hours |
January | $8,700 | 800 |
February | 8,360 | 720 |
March | 8,950 | 810 |
April | 9,360 | 920 |
May | 9,625 | 950 |
June | 9,150 | 900 |
a. What is the variable utilities cost per machine hour for Barkoff? b. What is the fixed utilities cost per month for Barkoff?
c. Using the high-low method, what would be the utilities cost for Barkoff associated with 980 machine hours?
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