Given the following costs and activities for Dance Company electrical costs, use the high-low method to calculate Dance's variable electrical costs per machine hour. Costs Machine Hours
Aug)$11,700 15,000
Sept.$13,200 17,500
Oct)$11,400 14,500
A)$2.08
B)$6.00
C)$0.60
D)$1.20

Question

Quizplus · Accepted Answer

To use the high-low method, we need to identify the highest and lowest levels of activity and their respective costs. From the data given, we can see that the highest level of activity is in September (17,500 machine hours) and the lowest level is in October (14,500 machine hours).

Using these two data points, we can calculate the variable cost per machine hour as follows:

Variable cost per machine hour = (Highest cost - Lowest cost) / (Highest machine hours - Lowest machine hours)
= ($13,200 - $11,400) / (17,500 - 14,500)
= $1,800 / 3,000
= $0.60

Therefore, the variable electrical cost per machine hour for Dance Company is $0.60.

Option C is the correct answer.

Given the Following Costs and Activities for Dance Company Electrical