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

	Machine Hours	Utility Cost
High Activity Level	4,319	39,891
Low Activity Level	4,214	39,258
Change	105	633
Variable Cost per Unit	6.03	per Machine Hour
Fixed Cost	13,847

Calculation:

Variable Cost per Unit	633/105	6.03
Fixed Cost	39891-(6.03*4319)	13,847

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