Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow:

Requirements:

Month	Total Cost	Machine Hours
January. . . . . .	$3,480	1,070
February. . . . .	$3,700	1,120
March. . . . . . .	$3,500	1,000
April. . . . . . . . .	$3,730	1,210
May. . . . . . . . .	$4,100	1,350
June. . . . . . . .	$4,200	1,400

Using the high-low method, answer the following questions:
1.	What is the variable utilities cost per machine hour?
2.	What is the fixed cost of utilities each month?
3.	If TranTran Company uses 1290 machine hours in a month, what will its total costs be?

Requirement 1. What is the variable utilities cost per machine hour?

Let's begin by determining the formula that is used to calculate the variable cost (slope).

Change in cost

/

Change in volume

=

Variable cost (slope)

(Round the variable cost to the nearest cent.)

Using the high-low method, the variable utilities cost per machine hour is $

.