Mel owns a machine shop. In reviewing the shop\'s utlity bills for the past 12 m

Question

Mel owns a machine shop. In reviewing the shop's utlity bills for the past 12 months, he found that the highest bill of $2,600 occurred in August when the machines worked 1,400 machine hours. The lowest utility bill of $2,300 occurred in December when the machines worked 900 machine hours Requirements 1. Calculate the variable rate per machine hour and the total fixed utility cost 2. Show the equation for determining total utility cost for the machine shop. 3. If Mel anticipates using 1,000 machine hours in January, predict the shop's total utility bill using the equation from Requirement 2 First, calculate the variable rate per machine hour. Select the formula labels, then enter the amounts and compute the variabie rate per machine (Use the high-low method. Round your answer to the nearest cent) Change in total costs / Change in volume of activity Variable rate per machine hour Calculate the total fixed cost. Select the formula labels, then enter the amounts and compute the total fixed cost. (Use the highest point) -(Totalvanable cost Total mixed cost Total fixed cost Requirement 2. Show the equation for determining total utility cost for the machine shop. x Number of machine hours Total utility cost $ 0.60 Choose from any list or enter any number in the input fields and then continue to the next question

Explanation / Answer

Explanations: Change in total costs = 2600-2300 = 300. Change in volume of activity = 1400-900 = 500

Total variable cost = 0.60*1400 = 840

2.

3.

1 Change in total costs / Change in volume of activity = Variable rate per machine hour 300 / 500 = 0.60 Total mixed cost - Total variable cost = Total fixed cost 2600 - 840 = 1760

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