Question

Information about Brightman Corporation's utility cost for the first six months of 2001 follows. The company's cost accountant wants to use the high-low method to develop a cost formula to predict future charges and believes that the number of machine hours is an appropriate cost driver. $$ \begin{array}{lcr} \text { Month } & \begin{array}{c} \text { Machine } \\ \text { Hours } \end{array} & \begin{array}{r} \text { Utility } \\ \text { Expense } \end{array} \\ \hline \text { January } & 68,000 & \$ 1,220 \\ \text { February } & 62,000 & 1,172 \\ \text { March } & 66,300 & 1,014 \\ \text { April } & 64,000 & 1,195 \\ \text { May } & 67,500 & 1,300 \\ \text { June } & 62,500 & 1,150 \end{array} $$ a. What is the cost formula for utility expense? b. What would be the budgeted utility cost for September 2001 if 64,750 machine hours are projected?

   Information about Brightman Corporation's utility cost for the first six months of 2001 follows. The company's cost accountant wants to use the high-low method to develop a cost formula to predict future charges and believes that the number of machine hours is an appropriate cost driver.
$$
\begin{array}{lcr}
\text { Month } & \begin{array}{c}
\text { Machine } \\
\text { Hours }
\end{array} & \begin{array}{r}
\text { Utility } \\
\text { Expense }
\end{array} \\
\hline \text { January } & 68,000 & \$ 1,220 \\
\text { February } & 62,000 & 1,172 \\
\text { March } & 66,300 & 1,014 \\
\text { April } & 64,000 & 1,195 \\
\text { May } & 67,500 & 1,300 \\
\text { June } & 62,500 & 1,150
\end{array}
$$
a. What is the cost formula for utility expense?
b. What would be the budgeted utility cost for September 2001 if 64,750 machine hours are projected?
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Cost Accounting: Traditions and Innovations
Cost Accounting: Traditions and Innovations
Jesse T. Barfield,… 4th Edition
Chapter 3, Problem 35 ↓

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Step 1

- From the data provided, the highest number of machine hours is in January (68,000 hours) with a utility expense of \$1,220. - The lowest number of machine hours is in February (62,000 hours) with a utility expense of \$1,172.  Show more…

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Information about Brightman Corporation's utility cost for the first six months of 2001 follows. The company's cost accountant wants to use the high-low method to develop a cost formula to predict future charges and believes that the number of machine hours is an appropriate cost driver. $$ \begin{array}{lcr} \text { Month } & \begin{array}{c} \text { Machine } \\ \text { Hours } \end{array} & \begin{array}{r} \text { Utility } \\ \text { Expense } \end{array} \\ \hline \text { January } & 68,000 & \$ 1,220 \\ \text { February } & 62,000 & 1,172 \\ \text { March } & 66,300 & 1,014 \\ \text { April } & 64,000 & 1,195 \\ \text { May } & 67,500 & 1,300 \\ \text { June } & 62,500 & 1,150 \end{array} $$ a. What is the cost formula for utility expense? b. What would be the budgeted utility cost for September 2001 if 64,750 machine hours are projected?
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