Question
The management of Mostly Safe Bungee Manufacturing Corporation believes that machine- hours are an appropriate measure of activity for utility costs. Shown below are machine-hours
The management of Mostly Safe Bungee Manufacturing Corporation believes that machine- hours are an appropriate measure of activity for utility costs. Shown below are machine-hours and total utility costs for the past six months:
| Machine-Hours Used | Utility Cost |
Jan | 10,000 | $30,000 |
Feb | 14,000 | $37,500 |
Mar | 20,000 | $50,000 |
Apr | 13,000 | $36,200 |
May | 17,000 | $41,500 |
Jun | 12,000 | $34,300 |
Assume that the relevant range includes all of the activity levels mentioned in this problem.
Using the high-low method, what is Mostly Safe's estimated total fixed utility cost?
Using the variable and fixed costs calculated from the high-low method, what would total costs be for machine hours used of 15,500?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started