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Meyer 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
Meyer 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:
Month | Total Cost | Machine Hours |
January | $3,420 | 1,010 |
February | $3,720 | 1,110 |
March | $3,500 | 1,000 |
April | $3,730 | 1,210 |
May | $4,100 | 1,340 |
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 Meyer Company uses 1,280 machine-hours in a month, what will its total costs be ?
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