Whitehouse Company manufactures major appliances. Because of growing interest in its products, it...
Question:
Whitehouse Company manufactures major appliances. Because of growing interest in its products, it has just had its most successful year. In preparing the budget for next year, its controller compiled these data:
| Month | Volume in Machine Hours | Electricity Cost |
| July | 6,000 $ | 60,000 |
| August | 5,000 | 53,000 |
| September | 4,500 | 49,500 |
| October | 4,000 | 46,000 |
| November | 3,500 | 42,500 |
| December | 3,000 | 39,000 |
| Six-month total | 26,000 | $290,000 |
Using the high-low method, determine the variable electricity cost per machine hour and the monthly fixed electricity cost. Estimate the total variable electricity costs and fixed electricity costs if 4,800 machine hours are projected to be used next month.
Mixed Cost:
Mixed Costy has fixed and variable cost components. There are three methods in separating the fixed and variable components of a mixed cost: 1. scatter graph, 2. regression analysis, and 3. high-low method. The High-low method is the method used usually by accountants.
Answer and Explanation: 1
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View this answer| Highest Activity Cost | 60,000 |
| Lowest Activity Cost | 39,000 |
| Difference | 21,000 |
| Highest Activity | 6,000 |
| Lowest Activity | 3,000 |
| Difference | 3,000 |
| Difference... |
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