Question

Electricity costs at Halladay Corporation’s manufacturing plant are listed below. Machine-Hours Utility Cost March 4,214 $ 39,258 April 4,278 $ 39,613 May 4,319 $ 39,891 June 4,242 $ 39,414 July 4,298 $ 39,747 August 4,310 $ 39,808 September 4,235 $ 39,482 October 4,311 $ 39,821 November 4,233 $ 39,405 Halladay's Management has determined that the plant's electricity cost is a mixed cost that depends on machine-hours used at the plant. Required: Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method. (Round your variable cost to 2 decimal places and fixed cost to the nearest dollar amount. Be sure to round variable cost to 2 decimal places in all intermediate calculations. Omit the "$" sign in your response.) Variable cost $ Fixed cost $

Answer 1

Variable cost =(39613-39258)/(4278-4214)=5.55 p machine hour

Total variable cost of April = 5.55×4278=23743

Total fixed cost of april=39613-23743=15870

Variable cost per machine hr of may=[39891-39613]÷[4319- 4278]

=6.78

Variable cost of may=6.78×4319=29285

Fixed cost of may=39891-29285=10606

Variable cost p mach.hr of june=6.19

Total variable cost=26278

Fixed cost=13136

Variable cost of july=5.95per machine hr

Variable cost=25558

Fixed cost=14189

VC per machine hr of august=5.08

VC=21909

FC=17899

VC p machine hr of sep =4.35

VC=18408

FC=21074

VC p machine hr oct=4.46

VC =19229

FC=20592

VC p machine hr november=5.33

VC = 22576

FC = 16829