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    Calculating the expected utility cost by High-Low method

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    Frenchy's Company needs to determine the variable utilities rate per machine hour in order to estimate cost for August. Relevant information is as follows:

    April - 4500 machine hours and $9,560 Utilities expense

    May - 4200 machine hours and $9,440 Utilities expense

    June - 6500 machine hours and $11,725 Utilities expense

    July - 7000 machine hours and $11,400 Utilities expense

    Frenchy's management anticipates producing 5,000 units in August. The company uses the high-low method to analyze costs. Using the high-low method, determine the expected costs for Utilities in August. B. Using the data calculated above, estimate the utilities cost for August.

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    Solution Preview

    Highest level of activity=x2=7000
    Total Utilities expanses associated with highest level of activity=y2=$11400

    Lowest level of ...

    Solution Summary

    Solution describes the steps to calculate expected utility cost by using High-Low method.