Meyer Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow:
Month
Total Cost
Machine Hours
January
$3,450
1,020
February
$3,720
1,110
March
$3,467
1,010
April
$3,730
1,270
May
$4,900
1,320
June
$4,232
1,460
Requirements
Using the high-low method, answer the following questions:
- 1.What is the variable utilities cost per machine hour?
- 2.What is the fixed cost of utilities each month?
- 3.If Meyer Company uses 1,280 machine hours in a month, what will its total costs be?