1. (Give workings for your answer)The following data pertains to activity and utility cost for two recent periods:Activity level (units)8,0005,000Utility cost$8,000$6,500Utility cost is a mixed cost with both fixed and variable components. Using the high-lowmethod, the cost formula for utility cost is:A. Y = $1.00 XB. Y = $1.25 XC. Y = $4,000 + $0.50 XD. Y = $1,500 + $1.25 X

As per high low method, Fixed costs and variable costs are calculated by taking data of lowest units…

Answered: Using the high-low method, the cost…

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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1. (Give workings for your answer)

The following data pertains to activity and utility cost for two recent periods:

Activity level (units)	8,000	5,000
Utility cost	$8,000	$6,500

Utility cost is a mixed cost with both fixed and variable components. Using the high-low
method, the cost formula for utility cost is:
A. Y = $1.00 X
B. Y = $1.25 X
C. Y = $4,000 + $0.50 X
D. Y = $1,500 + $1.25 X

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