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25 March, 12:22

Given the following costs and activities for Dance Company's electrical costs, use the high-low method to determine Dance's variable electrical costs per machine hour. Costs Machine Hours August $11,700 15,000 September 13,200 17,500 October 11,400 14,500 a.$6.00 b.$1.20 c.$0.60 d.$2.08

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  1. 25 March, 13:12
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    The variable cost is $0.6 per Machine Hour. So, option C is the correct answer.

    Explanation:

    The high low method is a method used to calculate the variable component per unit in a mixed cost. A mixed cost is a cost which contains an element of both the fixed and the variable cost.

    The formula for variable cost per unit under High-low method is,

    Variable cost per unit = (Cost at Highest activity - Cost at lowest activity) / (Highest activity units - lowest activity units)

    The highest activity is in September while the lowest is in October.

    Variable cost per unit = (13200 - 11400) / (17500 - 14500)

    Variable cost per unit = $0.6 per Machine hour
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