(Appendix 5A) Wilson Corporation's activity for the first six of the current year is as follows:

-Using the high-low method,the fixed portion of the electrical cost each month would be:
A) $400
B) $760
C) $280
D) $190

Question

(Appendix 5A) Wilson Corporation's activity for the first six of the current year is as follows:
 
-Using the high-low method,the fixed portion of the electrical cost each month would be:
A) $400 
B) $760 
C) $280 
D) $190

Quizplus · Accepted Answer

11ea7761_1889_3730_81a5_3942a767fdaa_TB2580_00 Variable cost = Change in cost ÷ Change in activity
Variable cost = $720 ÷ 1,200 machine-hours = $0.60 per machine-hour
Fixed cost = Total cost - Variable cost
Fixed cost = $2,200 - ($0.60 per machine-hour × 3,000 machine-hours) = $400

(Appendix 5A) Wilson Corporation's Activity for the First Six of the Current