The following information is available about electricity costs for the first six months of the year. Management think that electricity costs are likely to be related to how long machines are running. Month Machine hours Electricity Cost January 2,800 $2,925 February 5,600 $5,526 March 6,200 $5,980 April 3,500 $3,620 May 2,300 $2,470 June 4,500 $4,450 You may wish to refer to the formula sheet to answer this question. If you haven't already downloaded it, you can download it here. Required: Using the high-low method, (a) calculate the fixed costs b. state the cost formula for estimating the electricity cost based on the machine hours
The following information is available about electricity costs for the first six months of the year. Management think that electricity costs are likely to be related to how long machines are running. Month Machine hours Electricity Cost January 2,800 $2,925 February 5,600 $5,526 March 6,200 $5,980 April 3,500 $3,620 May 2,300 $2,470 June 4,500 $4,450 You may wish to refer to the formula sheet to answer this question. If you haven't already downloaded it, you can download it here. Required: Using the high-low method, (a) calculate the fixed costs b. state the cost formula for estimating the electricity cost based on the machine hours
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 17BEA: Use the following information for Brief Exercises 11-17and 11-18: Indy Company has the following...
Related questions
Topic Video
Question
The following information is available about electricity costs for the first six months of the year. Management think that electricity costs are likely to be related to how long machines are running.
|
Machine |
Electricity |
January |
2,800 |
$2,925 |
February |
5,600 |
$5,526 |
March |
6,200 |
$5,980 |
April |
3,500 |
$3,620 |
May |
2,300 |
$2,470 |
June |
4,500 |
$4,450 |
You may wish to refer to the formula sheet to answer this question. If you haven't already downloaded it, you can download it here.
Required:
Using the high-low method,
(a) calculate the fixed costs
b. state the cost formula for estimating the electricity cost based on the machine hours
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning