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14. Glascro Company manufactures skis. The management accountant wants to calculate the fixed and variable costs...

14.

Glascro Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected as follows:

Month Lease cost Machine hours
April $15,000    800
May 10,000    600
June 12,000    770
July 16,000 1,000


Using the high-low method, calculate the variable rate for the lease cost.

a.$25

b.$15

c.$59

d.$65

business   accounting   
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Answer #1

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(16000-10000)/(1000-600)

which is equal to

=$15

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