Chen Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow:
Month Total Cost Machine Hours
January.........................................................................$3,400..............1,090
February.......................................................................$3,730..............1,170
March...........................................................................$3,385..............1,070
April.............................................................................$3,750..............1,250
May..............................................................................$4,700..............1,380
June..............................................................................$3,985..............1,470
Requirements
Using the high-low method, answer the following questions:
1. What is the variable utilities cost per machine hour?
2. What is the fixed cost of utilities each month?
3. If Chen Company uses 1,260 machine hours in a month, what will its total costs be?