(Appendix 5A) Hiss Corporation's activity for the last six months is as follows:

-Using the high-low method of analysis,the estimated fixed cost per month for electricity is closest to:
A) $260
B) $235
C) $280
D) $800

Question

(Appendix 5A) Hiss Corporation's activity for the last six months is as follows:
 
-Using the high-low method of analysis,the estimated fixed cost per month for electricity is closest to:
A) $260 
B) $235 
C) $280 
D) $800

Quizplus · Accepted Answer

11ea7761_188e_db9b_81a5_c553aa30c096_TB2580_00 Variable cost = Change in cost ÷ Change in activity
Variable cost = $780 ÷ 1,200 machine-hours = $0.65 per machine-hour
Fixed cost = Total cost - Variable cost
Fixed cost = $2,230 - ($0.65 per machine-hour × 3,000 machine-hours) = $280

(Appendix 5A) Hiss Corporation's Activity for the Last Six Months