The following information is available for a company's utility cost for operating its machines over the last four months. Using the high-low method, the estimated variable cost per machine hour for utilities is:
A) $3.38.
B) $6.00.
C) $2.50.
D) $4.22.
E) $6.17.

Question

The following information is available for a company's utility cost for operating its machines over the last four months.  Using the high-low method, the estimated variable cost per machine hour for utilities is:
A) $3.38. 
B) $6.00. 
C) $2.50. 
D) $4.22. 
E) $6.17.

Quizplus · Accepted Answer

Variable cost per unit = Change in cost/change in units (using highest and lowest level of activity)
($8,100 − $3,600)/(2,400 − 600) = $2.50 per unit

The Following Information Is Available for a Company's Utility Cost