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Managerial Accounting: Jackson, Inc.

Jackson, Inc., is preparing a budget for next year and requires a break down of the cost of steam used in its factory into fixed and variable components. The following data on the cost of steam used and direct labor hours worked are available for the last 6 months:
Cost of steam Direct labor hours
July................. $15,850 3,000
August............... 13,400 2,050
September............ 16,370 2,900
October.............. 19,800 3,650
November............. 17,600 2,670
December............. 18,500 2,650

Total................ $101,520 16,920

If Jackson uses the high-low method of analysis, the estimated VARIABLE cost of steam per direct labor hour would be:
A)$4.00
B)$5.42
C)$5.82
D)$6.00

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Answer: A) $4.00

The highest value is in Oct $19,800 and the ...

Solution Summary

This solution provides answers to a question of managerial accounting.

$2.19