Given the following cost and activity observations for George Company's utilities, use the highlow method to calculate George's variable utilities costs per machine hour. $$\begin{array} { | l | l | r | }
\hline & \text { Cost } & \text { Machine Hours } \
\hline \text { May } &\$16,500 & 105,000 \
\hline \text { June } & 18,000 & 120,000 \
\hline \text { July } & 16,000 & 100,000 \
\hline \text { August } & 17,500 & 117,000 \
\hline
\end{array}$$
A) $100.00
B) $1.00
C) $10.00
D) $0.10

Question

Given the following cost and activity observations for George Company's utilities, use the high­low method to calculate George's variable utilities costs per machine hour. $$\begin{array} { | l | l | r | } 
\hline & \text { Cost } & \text { Machine Hours } \
\hline \text { May } &\$16,500 & 105,000 \
\hline \text { June } & 18,000 & 120,000 \
\hline \text { July } & 16,000 & 100,000 \
\hline \text { August } & 17,500 & 117,000 \
\hline
\end{array}$$
A) $100.00
B) $1.00
C) $10.00
D) $0.10

Quizplus · Accepted Answer

The variable utilities cost per machine hour is $0.10. This is calculated by dividing the difference in costs between the highest and lowest activity levels by the difference in activity levels. In this case, the difference in costs is $18,000 - $16,000 = $2,000, and the difference in activity levels is 120,000 - 100,000 = 20,000. Therefore, the variable utilities cost per machine hour is $2,000 / 20,000 = $0.10.

Given the Following Cost and Activity Observations for George Company's