Microdash Company uses the high-low method to analyze mixed costs.The following information relates to the production data for the first six months of the year.
How should the cost function be properly stated?
A)Y = $1,025 + $1.24H.
B)Y = $875 + $1.15H.
C)Y = $8,542 + $0.145H.
D)Y = $9,263 + $0.162H. Using March and May.Unit variable cost = ($9,500 - $7,200)/(7,500 - 5,500)= $1.15.Fixed cost = $9,500 - (7,500 x $1.15)= $875.= $7,200 - (5,500 x $1.15)= $875

Question

Microdash Company uses the high-low method to analyze mixed costs.The following information relates to the production data for the first six months of the year. 
How should the cost function be properly stated?
A)Y = $1,025 + $1.24H. 
B)Y = $875 + $1.15H. 
C)Y = $8,542 + $0.145H. 
D)Y = $9,263 + $0.162H. Using March and May.Unit variable cost = ($9,500 - $7,200)/(7,500 - 5,500)= $1.15.Fixed cost = $9,500 - (7,500 x $1.15)= $875.= $7,200 - (5,500 x $1.15)= $875

Quizplus · Accepted Answer

The high-low method was used to find the variable cost per unit ($1.15) and the fixed cost ($875). Using this information, we can plug in any level of production (represented by H) to find the total costs. Option B is the only choice that matches the calculated variable and fixed costs.

Microdash Company Uses the High-Low Method to Analyze Mixed Costs