Accounting:High-low method, cost sepreation etc
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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 26,000 $ 290,000
total
Using the high low method, determine (1) the variable electricity cost per machine hour, (2) the monthly fixed electricity costs and (3) the total variable electricity costs and fixed electricity costs for the six month period.
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Solution Summary
The problem deals with estimating the variable and fixed costs, from a mixed cost, using high-low method.
Education
- B. Sc., University of Nigeria
- M. Sc., London South Bank University
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