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Estimating variable and fixed costs

Utility costs at one of Dwayne Corporation's factories are listed below:
Machine Hours Utility Cost
February 4.221 $ 39.308
March 4.268 39.573
April 4.234 39.392
May 4.237 39.394
June 4.299 39.787
July 4.318 39.881
August 4.305 39.798
September 4.308 39.831
October 4,226 39,315

Management believes that utility cost is a mixed cost that depends on machine-hours.

Required: Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method. Please show all computations.

Solution Preview

In the high low method we take the highest and the lowest values to calculate the fixed and variable cost
Variable cost = ...

Solution Summary

The solution estimates variable and fixed costs.