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Fixed utilties cost per month

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Use the folling information for the problem below:

Month Utilities Machine Hours

January $8,700,800
February 8,360,720
March 8,950,810
April 9,360,920
May 9,625,950
June 9,150,900

Atlanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilties cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:

The fixed utilties cost per month is:
A. $3,764
B. $4,400
C. $4,760
D. $5,100
E. an amount other than those listed above

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Solution Summary

The solution explains the use of high low method in calculating the fixed utilities cost per month

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We use the high low method to segregate the fixed and variable costs. In high low we take ...

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