Problem

(L. OBJ. 1) Mixed costs [5-10 min] Mel owns a machine shop. In reviewing his utility bi...

(L. OBJ. 1) Mixed costs [5-10 min]

Mel owns a machine shop. In reviewing his utility bill for the last 12 months he found that his highest bill of $2,400 occurred in August when his machines worked 1,000 machine hours. His lowest utility bill of $2,200 occurred in December when his machines worked 500 machine hours.

Requirement

1. Calculate (a) the variable rate per machine hour and (b) Mel’s total fixed utility cost.

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