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Accounting

Lewis Company needs to determine the variable utilities rate per machine hour in order to estimate cost for August. Relevant information is as follows.

Months Machine Hours worked Utilities Cost

April 4,500 $9,560
May 4,200 $9,440
June 6,500 $10,725
July 7,000 $11,400

Lewis anticipates producing 5,000 units in August, each unit requiring 1.5 hours of machine time. The company uses the high-low method to analyze costs.

Required:

A. Calculate the variable and fixed components of the utilities cost.

B. Using the data calculated above, estimate the utilities cost for August.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9417566

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