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Question - The management accountant of Ted & Co. is developing cost formulas for major overhead activities. The following information has been obtained regarding the behavior of the factory power costs over a number of months:
Month
Machine Hours
Power Cost ($)
January
February
March
April
May
June
3,000
2,200
2,000
1,600
2,500
2,800
13,570
12,250
11,265
10,905
12,655
13,530
Required - (a) Using the high-low method, calculate:
(i) The variable cost per machine hour.
(ii) Total fixed cost per month.
(b) What would be the expected total cost for a month when machines are operating for 2,900 hours?
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