Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 20, Problem 3SE
Mark owns a machine shop. In reviewing the shop’s utility bills for the past 12 months, he found that the highest bill of $2,600 occurred in August when the machines worked 1,200 machine hours. The lowest utility bill of $2,300 occurred in December when the machines worked 600 machine hours.
Requirements
- 1. Use the high-low method to calculate the variable cost per machine hour and the total fixed utility cost.
- 2. Show the equation for determining the total utility cost for the machine shop.
- 3. If Mark anticipates using 800 machine hours in January, predict the shop’s total utility bill using the equation from Requirement 2.
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The following information is available for a company's utility cost for operating its machines over the last four months.
Month
Machine hours
Utility cost
January
900
$
5,450
February
1,800
$
6,900
March
2,400
$
8,100
April
600
$
3,600
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Chapter 20 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
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