Questi6. (TCO 9) Herbart Company gathered the following
information on power costs and factory...

Question

Questi6. (TCO 9) Herbart Company gathered the following
 information on power costs and factory machine usage for the last six months:

Power Cost

Factory Machine Hours

January

$24,400

13,900

February

30,300

17,600

March

29,000

16,800

April

22,340

13,200

May

19,900

11,600

June

14,900

6,600

Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers.
 
 Part (a) What is the estimated variable portion of power costs per factory machine hour?
 Part (b) What is the estimated fixed power cost each month?
 Part (c) If it is estimated that 10,000 factory machine hours will be run in July, what is the expected
 total power cost for July?

David · Accepted Answer

SOLUTION:
(a) Variable power cost per factory machine hour:
  $30,300 – $14,900 $15,400 
 ————————— = ———— = $1.40 per factory machine hour 
     17,600 – 6,600  11,000 
 
(b) Monthly fixed power cost: 
     High    Low 
 (February)   (June)  
 Total costs  $30,300 $14,900 
 Less:

Questi 6. (TCO 9) Herbart Company gathered the following information on power costs and factory machine usage for the last six months: Power Cost Factory Machine Hours January $24,400 13,900 February...

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