Reference: 18_02
Tanner Inc. has incurred the following overhead costs over a six-week period:
$$\begin{array} { | c | c | c | }
\hline \text { Week } & \text { Machine Hours } & \text { Overhead Cost } \
\hline 1 & 68 & \$ 1,190 \
\hline 2 & 62 & \$ 1,004 \
\hline 3 & 72 & \$ 918 \
\hline 4 & 46 & \$ 710 \
\hline 5 & 94 & \$ 1,025 \
\hline 6 & 48 & \$ 965 \
\hline
\end{array}$$
-Using the high-low method,calculate the variable cost component of these overhead costs (round to the nearest two decimal places).
A) $14.90/hr.
B) $10.00/hr.
C) $11.25/hr.
D) $ 7.65/hr.
E) $ 6.56/hr.

Question

Reference: 18_02
Tanner Inc. has incurred the following overhead costs over a six-week period:
 $$\begin{array} { | c | c | c | } 
\hline \text { Week } & \text { Machine Hours } & \text { Overhead Cost } \
\hline 1 & 68 & \$ 1,190 \
\hline 2 & 62 & \$ 1,004 \
\hline 3 & 72 & \$ 918 \
\hline 4 & 46 & \$ 710 \
\hline 5 & 94 & \$ 1,025 \
\hline 6 & 48 & \$ 965 \
\hline
\end{array}$$
-Using the high-low method,calculate the variable cost component of these overhead costs (round to the nearest two decimal places).
A) $14.90/hr.
B) $10.00/hr.
C) $11.25/hr.
D) $ 7.65/hr.
E) $ 6.56/hr.

Quizplus · Accepted Answer

The high-low method calculates the variable cost per unit by taking the difference in costs between the highest and lowest activity levels and dividing by the difference in activity levels. Here, the highest machine hours are 94 with a cost of $1,025, and the lowest are 46 with a cost of $710. The variable cost per hour is ($1,025 - $710) / (94 - 46) = $6.56/hr.

Reference: 18_02 Tanner Inc -Using the High-Low Method,calculate the Variable Cost Component of These

Reference: 18_02
Tanner Inc -Using the High-Low Method,calculate the Variable Cost Component of These