Question

please answer requierement 1,2 and 3

Tran 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: Click the icon to view the data.) Read the requirements

Answer 1

Requirement 1 & 2 | Variable Cost & Fixed Costs Particulars Total Cost Machine Hours Highest Level of Activity $ 4,076 1,460 Lowest Level of Activity $ 3,400 1,090 Difference $ 676 370 Determination of Variable Cost per Unit : Cost at Highest Level of Activity - Cost at Lowest Level of Activity Variable Cost per Unit Hours at Highest Level of Activity - Hours at Lowest Level of Activity Variable Cost per Unit = $ 4,076 - $ 3,400 1,460 Hours - 1,090 Hours Variable Cost per Unit = $ 1.83 Per Machine Hour Determination of Fixed Cost : Units Produced 1,460 Variable Cost per Unit $ 1.83 Per Kilometer Variable Cost $ 2,667 Fixed Cost = Total Labor Cost - Total Variable Cost Fixed Cost = $ 4,076 - $ 2,667 Fixed Cost = $ 1,409 Per Year Total Fixed Cost Variable Cost Per Unit 1,409 $ 1.83 $ Requirement 3 | Total Costs No. of Machine Hours Fixed Cost Variable Cost 1,260 $ 1,409 $ 2,302 $ Total Cost 3,711