Electrical costs at one of Finfrock Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours.Use the high-low method to estimate the variable and fixed components of this cost.Compute the variable component first, rounding off to the nearest whole cent.Then compute the fixed component, rounding off to the nearest whole dollar.Those estimates are closest to:

Question

Electrical costs at one of Finfrock Corporation's factories are listed below:  Management believes that electrical cost is a mixed cost that depends on machine-hours.Use the high-low method to estimate the variable and fixed components of this cost.Compute the variable component first, rounding off to the nearest whole cent.Then compute the fixed component, rounding off to the nearest whole dollar.Those estimates are closest to:

Quizplus · Accepted Answer

11ea7998_5e2e_6541_911b_3dce95fd2545_TB2627_00_TB2627_00 Variable cost per unit = Change in cost ÷ Change in activity
= $438 ÷ 55 machine-hours
= $7.96 per machine-hour
Fixed cost = Total cost - Variable cost element
= $40,706 - ($7.96 per machine-hour × 3,667 machine-hours)
= $40,706 - $29,189
= $11,517

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