The following data pertains to activity and utility cost for two recent periods: activity level (units) 8,000 5,000 utility cost $8,000 $6,500 utility cost is a mixed cost with both fixed and variable components. what is the cost formula for utility cost using the high-low method?

Y = 4,000 + 0.5X

Explanation:

Given that,

Activity and Utility cost for two recent periods are as follows:

Activity level (units):

Period 1 = 8,000

Period 2 = 5,000

Utility cost:

Period 1 = 8,000

Period 2 = 6,500

The cost formula for utility cost:

Y = 4,000 + 0.5X

If Y(Utility cost period 1) = 8,000 and X(Activity cost period 1) = 8,000, then

From the above equation,

$8,000 = 4,000 + 0.5 × 8,000

$8,000 = 4,000 + 4,000

$8,000 = $8,000

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