Using the high-low methodMark, owns a machine shop. In reviewing the shop’s utility bills for the past 12 months, he found that the highest bill of $2,600 occurred in August when the machines worked 1,200 machine hours. The lowest utility bill of $2,300 occurred in December when the machines worked 600 machine hours.RequirementsUse the high—low method to calculate the variable cost per machine hour and the total fixed utility cost.Show the equation for determining the total utility cost for the machine shop.If Mark anticipates using 800 machine hours in January, predict the shop’s total utility bill using the equation from Requirement 2.

Name: Using the high-low methodMark, owns a machine shop. In reviewing the s
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Description: Using the high-low methodMark, owns a machine shop. In reviewing the shop’s utility bills for the past 12 months, he found that the highest bill of $2,600 occurred in August when the machines worked 1,200 machine hours. The lowest utility bill of $2,

High-low method: It is the method of estimating the variable cost per unit and the fixed costs by…

Answered: Using the high-low method Mark, owns a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Using the high-low method

Mark, owns a machine shop. In reviewing the shop’s utility bills for the past 12 months, he found that the highest bill of $2,600 occurred in August when the machines worked 1,200 machine hours. The lowest utility bill of $2,300 occurred in December when the machines worked 600 machine hours.

Requirements

Use the high—low method to calculate the variable cost per machine hour and the total fixed utility cost.
Show the equation for determining the total utility cost for the machine shop.
If Mark anticipates using 800 machine hours in January, predict the shop’s total utility bill using the equation from Requirement 2.

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