Question: Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost. The company's relevant
Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:
| Month | Utilities Cost | Machine Hours |
|---|---|---|
| January | $8,700 | 800 |
| February | 8,360 | 720 |
| March | 8,300 | 710 |
| April | 9,360 | 920 |
| May | 9,625 | 950 |
| June | 9,800 | 960 |
Using the high-low method, the utilities cost for Barkoff associated with 980 machine hours would be:
-
9,700
-
9,510
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None of the answers is correct.
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9,790
-
9,920
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$9,660.
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