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17 June, 13:26

The controller of Sunland Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,590 330 February 2,890 380 March 3,490 530 April 4,390 660 May 3,090 530 June 5,470 730 (a1) Determine the variable cost components using the high-low method. (Round answer to 2 decimal places e. g. 2.25.) Variable cost per machine hour $

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  1. 17 June, 15:06
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    Variable cost per unit = $7.2 per unit

    Explanation:

    Giving the following information:

    Month Total Maintenance Costs Total Machine Hours

    January: $2,590 - 330

    February: $2,890 - 380

    March: $3,490 - 530

    April: $4,390 - 660

    May: $3,090 - 530

    June: $5,470 - 730

    To calculate the variable cost under the high-low method, 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 = (5,470 - 2,590) / (730 - 330)

    Variable cost per unit = $7.2 per unit
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