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Question Help Tran Company, which uses the high-low method to analyze cost behaviour, has determined that machine hours best
Data Table Month Total Cost Machine Hours $ 3,538 1,040 January February $ 3,730 1,190 March $ 3,530 1,055 April $ 3.750 1,25
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Answer #1

Solution:

Variable cost of utilities per machine hour = (Cost at high level - Cost at low level) / (High level activity - Low level activity)

= ($5,603 - $3,538) / (1740 - 1040)

= $2.95 per machine hour

Fixed costs = $5,603 - (1740*$2.95) = $470

Total expected cost at 1260 machine hours = $470 + (1260*$2.95) = $4,187

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