The King Company has identified its utility costs as mixed costs. At 2,000 machine hours, utility costs were $5,400. At 3,500 machine hours, utility costs were $8,100. Using the high-low method, what are the variable utility cost per machine hour and the total fixed utility cost?

The King Company has identified its utility costs as mixed costs. At 2,000 machine hours, utility costs were $5,400. At 3,500 machine hours, utility costs were $8,100. Using the high-low method, what are the variable utility cost per machine hour and the total fixed utility cost?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2DQ: Which of the following costs would be classified as variable and which would be classified as fixed,...

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Question

Can you solve this general accounting problem using appropriate accounting principles?

The King Company has identified its utility costs as
mixed costs. At 2,000 machine hours, utility costs
were $5,400. At 3,500 machine hours, utility costs
were $8,100. Using the high-low method, what are
the variable utility cost per machine hour and the
total fixed utility cost?

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