Answered: Calculate the Variable Cost using the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An accountant has been monitoring the overall indirect service costs incurred at their company based on the number of labour hours worked. They accept that the costs follow a uniform, regular pattern so decide to use the High-Low method to calculate the Variable Costs and then the fixed costs.

The have found the during the month when the lowest hours were worked ( 2083 hours) that the service costs in that low activity month was $14705. In the month when the highest hours were worked ( 4803 hours) the service costs were $18998.

Calculate the Variable Cost using the high-low method.

Note: Do not input the $ sign, just the decimal number to two decimal places

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