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Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round your answer to the nearest cent.

Cost Machine Hours
March $3,106 15,176
April 2,668 9,558
May 2,892 11,947
June 3,538 17,899

a. $0.59
b. $0.63
c. $1.25
d. $0.10

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Answer:

Variable cost per unit= $0.10

Explanation:

Giving the following information:

Cost Machine Hours

March $3,106 15,176

April 2,668 9,558

May 2,892 11,947

June 3,538 17,899

To calculate the variable cost under the high-low method, we need to use the following formula:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (3,583 - 2,668) / (17,899 - 9,558)

Variable cost per unit= $0.10

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