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Morgan Co. gathered the following information on power costs and factory machine usage for the last six months:

Morgan Co. gathered the following information on power costs and factory machine usage for the last six months:

Month Electricity Cost Factory Machine Hours

July $24,400 13,900

August 29,200 17,600

September 29,000 16,800

October 22,340 13,200

November 19,900 11,600

December 14,900 6,600

Instructions

Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers.

(a) What is the estimated variable portion of power costs per factory machine hour?

(b) What is the estimated fixed power cost each month?

(c) If it is estimated that 10,000 factory machine hours will be run in January of the next year, what is the expected total power cost for January?

Please give detail correct answer 

Top Answer

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solution.docx

Answer 1 Varible cost
of power
cost per
machine
hour =
=
=
= Using high low method (Highest electricity cost - Lowest elec cost)
(highest machine hours - Lowest machine
hours)
(29200-14900)...

1 comment
  • hi, if you are satisfied with the answer, kindly select it as best one and also provide best feedback. thanks.
    • CApratik
    • Jul 20, 2016 at 2:19am

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