Question 4

Utility costs at one UISZ Power Corporation's factories are listed below:

Machines hours Utility cost $

Feb 4221 39,308

match 4268 39,573

April 4234 39,392

may 4237 39,394

June 4299 39,787

July 4318 39,881

Aug 4305 39,798

Sep 4308 39,831

Oct 4226 39,315

Management believes that utility cost is a mixed cost that depends on machinehours

Required:

a) Estimate the variable cost per machine-hour. Show your work.

b) Using the high-low method to calculate the fixed cost per month.

c) If the company uses 4800 machine hours in November, how much will the total utility bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar. State two disadvantages of high-low method. (Word limit: 100 words,

d) Define total and unit fixed and variable cost. Explain why the distinction between the two types of costs is important. (Word limit: 100 words,