Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round your answer to the nearest cent. Cost Machine Hours March $3,140 14,747 April 2,662 9,893 May 2,877 12,352 June 3,565 18,240

The correct answer is $0.11.

Explanation:

According to the scenario, the computation for the given data are as follows:

According to the high-low method, we first check for the high point and low point of the cost

So,                

High point =     cost 3,565     machine hours 18,240

Low point =       cost  2,662    machine hours  9,893

So, we can calculate variable utilities cost per machine hour by using following method

Variable utilities cost per machine hour = Difference in cost ÷ Difference in machine hours

= ( 3,565 - 2,662) ÷ ( 18,240 - 9,893)

= 903 ÷ 8347

= $0.11

Hence, the variable utilities cost per machine hour is $0.11.

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