Question
Hot'lanta, Inc., 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
Hot'lanta, Inc., 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 | $8700 | 800 |
February | 8360 | 720 |
March | 8950 | 810 |
April | 9360 | 920 |
May | 9625 | 950 |
June | 9150 | 900 |
1.The variable utilities cost per machine hour is: a) $0.18. b) an amount other than those listed above. c) $4.50. d) $5.00. e) $5.50. 2. The fixed utilities cost per month is: a) an amount other than those listed above. b) $4,760. c) $3,764. d) $5,100. e) $4,400.
3. Using the high-low method, the utilities cost associated with 980 machine hours would be: a) an amount other than those listed above. b) $9,660. c) $9,700. d) $9,790. e) $9,510.
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