Red Deer Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past six months were collected.
Utility Machine
Month cost hours
March $30,255 2,200
April 32,750 2,525
May 34,712 2,710
June 31,850 2,410
July 30,720 2,290
August 29,980 2,150
Required:
A. Using the high-low method, calculate the variable rate per machine hour for the utility cost.
B. Using the high-low method, calculate the fixed cost of utilities.
C. Construct a cost formula for total utility cost.
D. Estimate the cost of utilities if 2,425 machine hours are used.

Question

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The Answer of Red Deer Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past six months were collected.
Utility Machine
Month cost hours
March $30,255 2,200
April 32,750 2,525
May 34,712 2,710
June 31,850 2,410
July 30,720 2,290
August 29,980 2,150
Required:
A. Using the high-low method, calculate the variable rate per machine hour for the utility cost.
B. Using the high-low method, calculate the fixed cost of utilities.
C. Construct a cost formula for total utility cost.
D. Estimate the cost of utilities if 2,425 machine hours are used.

Red Deer Company Manufactures Motorcycles