Electrical costs at one of Rome Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours.
Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to: (Round your intermediate calculations to 2 decimal places.)

Question

Electrical costs at one of Rome Corporation's factories are listed below:  Management believes that electrical cost is a mixed cost that depends on machine-hours.
Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to: (Round your intermediate calculations to 2 decimal places.)

Quizplus · Accepted Answer

11eacbfc_c8b0_ab9f_8ffe_b5dad25bb24a_TB7552_00 Variable cost per unit = Change in cost ÷ Change in activity
= $203 ÷ 96 machine-hours
= $2.11 per machine hour
Total fixed cost = Total cost - Variable cost element
= $1,025 - ($2.11 per machine-hour × 468 machine-hours)
= $1,025 - $987
= $38

Electrical Costs at One of Rome Corporation's Factories Are Listed