The controller of Hall Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Total Machine Hours Maintenance Costs January $ 3,041 4,032February 3,456 4,608March 4,147 6,912April 5,184 9,101May 3,686 5,760June 5,322 9,216Determine the variable-cost components using the high-low method. (Round variable cost to 2 decimal places e. g. 12.25.)

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Business

Milagros Kent

17 February, 05:04

The controller of Hall Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Total Machine Hours Maintenance Costs January $ 3,041 4,032February 3,456 4,608March 4,147 6,912April 5,184 9,101May 3,686 5,760June 5,322 9,216Determine the variable-cost components using the high-low method. (Round variable cost to 2 decimal places e. g. 12.25.)

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Pablo Fletcher · Answer 1

Variable cost per unit = $2.27 per machine hour

Explanation:

Giving the following information:

January 3,041 $4,032

February 3,456 $4,608

March 4,147 $6,912

April 5,184 $9,101

May 3,686 $5,760

June 5,322 $9,216

To calculate the unitary variable cost, we need to use the following formula:

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

Variable cost per unit = (9,216 - 4,032) / (5,322 - 3,041)

Variable cost per unit = $2.27 per machine hour