Wilson Company's activity for the first six months of the current year is as follows:
$\begin{array} {| l | r | r | }
\hline & \text { Machine Hours } & \text { Electrical Cost } \
\hline \text { January } & 2,000 & \$ 1,560 \
\hline \text { February } & 3,000 & 2,200 \
\hline \text { March } & 2,400 & 1,750 \
\hline \text { April } & 1,900 & 1,520 \
\hline \text { May } & 1,800 & 1,480 \
\hline \text { June } & 2,100 & 1,600\\hline
\end{array}$

-Using the high-low method,what is the variable cost per machine hour?
A) $0.40 per hour.
B) $0.60 per hour.
C) $0.64 per hour.
D) $0.67 per hour.

Question

Wilson Company's activity for the first six months of the current year is as follows:
$\begin{array} {| l | r | r | } 
\hline & \text { Machine Hours } & \text { Electrical Cost } \
\hline \text { January } & 2,000 & \$ 1,560 \
\hline \text { February } & 3,000 & 2,200 \
\hline \text { March } & 2,400 & 1,750 \
\hline \text { April } & 1,900 & 1,520 \
\hline \text { May } & 1,800 & 1,480 \
\hline \text { June } & 2,100 & 1,600\\hline
\end{array}$

-Using the high-low method,what is the variable cost per machine hour?
A) $0.40 per hour.
B) $0.60 per hour.
C) $0.64 per hour.
D) $0.67 per hour.

Quizplus · Accepted Answer

The high-low method involves taking the highest and lowest activity levels and using them to calculate the variable cost per unit. The highest activity level is in February (3,000 hours, $2,200 cost) and the lowest is in May (1,800 hours, $1,480 cost). The difference in cost ($2,200 - $1,480 = $720) divided by the difference in hours (3,000 - 1,800 = 1,200 hours) results in a variable cost of $0.60 per machine hour.

Wilson Company's Activity for the First Six Months of the Current