Home Remodeling Inc. recently obtained a short-term bank loan from City National Bank. The bank required that certain credit information and pro forma financial statements be maintained through the life of the loan. In order to prepare the pro forma statements, Home Remodeling must forecast total overhead cost. The actual machine hours and overhead cost are presented below for the past six months.Using the high-low method, unit variable overhead cost is calculated to be:
A) $2.49.
B) $3.40.
C) $2.06.
D) $2.60.
E) $2.00.

Question

Home Remodeling Inc. recently obtained a short-term bank loan from City National Bank. The bank required that certain credit information and pro forma financial statements be maintained through the life of the loan. In order to prepare the pro forma statements, Home Remodeling must forecast total overhead cost. The actual machine hours and overhead cost are presented below for the past six months.Using the high-low method, unit variable overhead cost is calculated to be:
A) $2.49. 
B) $3.40. 
C) $2.06. 
D) $2.60. 
E) $2.00.

Quizplus · Accepted Answer

The Answer of Home Remodeling Inc. recently obtained a short-term bank loan from City National Bank. The bank required that certain credit information and pro forma financial statements be maintained through the life of the loan. In order to prepare the pro forma statements, Home Remodeling must forecast total overhead cost. The actual machine hours and overhead cost are presented below for the past six months.Using the high-low method, unit variable overhead cost is calculated to be:
A) $2.49. 
B) $3.40. 
C) $2.06. 
D) $2.60. 
E) $2.00.