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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 Preview

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

    Solution Summary

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