Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to...

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Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to...

Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to calculate Smithson's fixed costs per month.

	Cost	Machine Hours
January	$64,740	10,100
February	109,560	18,400
March	76,390	12,200
April	93,020	15,300

a.$10,200

b.$32,600

c.$17,300

d.$8,200

business accounting

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Answer 1

Answer #1

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(109560-64740)/(18400-10100)

=$5.4 per machine hour

Hence fixed costs =109560-(5.4*18400)

=$10200

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Answer 2

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