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London Inc. has identified the following costs at different activity levels for electricity for their manufacturing plant: Units Produced Electricity Cost 1,000 $50,000 2,000 $97,400
London Inc. has identified the following costs at different activity levels for electricity for their manufacturing plant:
Units Produced | Electricity Cost |
1,000 | $50,000 |
2,000 | $97,400 |
3,000 | $148,000 |
4,000 | $192,500 |
5,000 | $242,000 |
Management is uncertain on how to predict costs at different activity levels and thus has asked for some assistance. Using the high-low method, determine the variable component of the electricity cost.
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