Based on the results of the high-low analysis,the estimate of electricity costs in a month with 2,200 machine hours would be:
A)$15,375
B)$22,825
C)$15,180
D)$16,427

Question

Quizplus · Accepted Answer

The high-low method calculates the variable cost per unit by dividing the difference in total cost between the high and low activity levels by the difference in activity levels. In this case, the difference in total cost is $7,450 ($22,825 - $15,375) and the difference in activity levels is 1,000 machine hours (3,000 - 2,000). Therefore, the variable cost per unit is $7.45 ($7,450 / 1,000). To estimate the electricity costs in a month with 2,200 machine hours, we multiply the variable cost per unit by the number of machine hours: $7.45 * 2,200 = $16,427.

Based on the Results of the High-Low Analysis,the Estimate of Electricity