A soft drink bottler incurred the following factory utility cost: $3,936 for 800 cases bottled and $3,988 for 900 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:
A)$4.92
B)$0.52
C)$4.43
D)$4.66

Question

Quizplus · Accepted Answer

To calculate the variable factory utility cost per case bottled, we need to first separate the fixed and variable components of the total cost. 
Using the high-low method, we can calculate the variable cost per case as follows:

Variable cost per case = (Total cost at high level of activity - Total cost at low level of activity) / (High level of activity - Low level of activity) 
= ($3,988 - $3,936) / (900 - 800) 
= $52 / 100 
= $0.52

Therefore, the variable factory utility cost per case bottled is $0.52. 
The other answer choices are not calculated correctly or do not reflect the correct variable cost per case.

A Soft Drink Bottler Incurred the Following Factory Utility Cost