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.

Question

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. ​

Quizplus · Accepted Answer

Using the high-low method, we need to first find the highest and lowest levels of machine hours and their corresponding costs. From the table provided in the image, we can see that the highest level is 9,500 machine hours with a cost of $6,900, and the lowest level is 3,500 machine hours with a cost of $4,900.

Variable cost per machine hour can be calculated as:

Variable Cost per Machine Hour = (Highest Cost - Lowest Cost) / (Highest Machine Hours - Lowest Machine Hours)

= ($6,900 - $4,900) / (9,500 - 3,500)

= $2,000 / 6,000

= $0.33

Therefore, the variable electrical cost per machine hour for Dance Company is $0.33, which is closest to option C) $0.60. The best choice is option C.

Given the Following Costs and Activities for Dance Company Electrical