The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs. During the first six months of the year, the company incurred the following electricity costs:MONTH MACHINE HOURS ELECTRICITY COSTJan 780 $8,200Feb 720 $8,360Mar 800 $8,950Apr 900 $9,360May 950 $9,625Jun 920 $9,150Using the high-low method, estimate the variable cost per machine hour.Select one:
The Longreach Toy Factory has determined machine hours to be the cost driver of the company's electricity costs. During the first six months of the year, the company incurred the following electricity costs:MONTH MACHINE HOURS ELECTRICITY COSTJan 780 $8,200Feb 720 $8,360Mar 800 $8,950Apr 900 $9,360May 950 $9,625Jun 920 $9,150Using the high-low method, estimate the variable cost per machine hour.Select one:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:The Longreach Toy Factory has determined
machine hours to be the cost driver of the
company's electricity costs. During the first
six months of the year, the company
incurred the following electricity
costs:MONTH MACHINE HOURS
ELECTRICITY COSTJan
780
$8,200Feb
720
$8,360Mar 800
$8,950Apr 900
$9,360May 950
$9,625Jun
920
$9,150Using the high-low method, estimate
the variable cost per machine hour.Select
one:
a. None of the answers is correct.
b. $7.44
c. $5.50
d. $8.38

Transcribed Image Text:Variable cost per unit:
a. increases in direct proportion to
changes in the cost driver
O b. remains unchanged as the level of
the cost driver changes
c. decreases in direct proportion to
changes in the cost driver
O d. increases, but not in direct proportion
to changes in the cost driver
The method of cost estimation that fits a
cost line between two data points is:
O a. multiple regression
O b. high-low
c. account classification
O d. least squares regression
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