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Meyer Company, which uses the high-low method to analyze cost behaviour, has determined that machine hours best predict the company's total utilities cost. The company's
Meyer Company, which uses the high-low method to analyze cost behaviour, 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. : (Click the icon to view the data.) Requirements Data Table 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 Meyer Company uses 1,290 machine hours in a month, what will its total costs be? Month Total Cost Machine Hours January ... ... $ 2,846 920 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). February .. $ 3,710 1,140 March $ 3,470 1,055 = Variable cost (slope) April $ 3,760 1,210 Using the high-low method, the variable utilities cost per machine hour is $(Round the variable cost to the nearest cent.) May $ 4,000 1,310 June $ 4,376 1,520 Requirement 2. What is the fixed cost of utilities each month? Let's begin by determining the formula that is used to calculate the fixed cost component. Print Done Fixed cost $ 2,846 920 Requirement 2. What is the fixed cost of utilities each month? Let's begin by determining the formula that is used to calculate the fixed cost component. January February $ 3,710 1,140 March $ 3,470 1,055 Fixed cost April $ 3,760 Using the high-low method, the fixed cost of utilities each month is $ . (Round the total variable costs to the nearest whole dollar.) $ 4,000 May June 1,210 1,310 1,520 .....$ 4,376 Requirement 3. If Meyer Company uses 1,290 machine hours in a month, what will its total costs be? The total costs when 1,290 machine hours are incurred is $ (Round your interim and final calculations to the nearest whole dollar.) Print Done
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