Gargymal Company Would Like to Estimate the Variable and Fixed

question 3

Multiple Choice

Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations:
$\begin{array} { | l | r | r | } \hline & \text { Machine Hours } & \text { Electrical Cost } \\\hline \text { August } & 1,000 & \$ 1,620 \\\hline \text { September } & 900 & 1,510 \\\hline \text { October } & 1,500 & 1,870 \\\hline \text { November } & 2,000 & 1,950 \\\hline \text { December } & 1,300 & 1,730 \\\hline\end{array}$


-Using the high-low method,the estimated variable cost per machine hour for electricity is closest to which of the following?

• A) $0.40 per hour.
• B) $0.98 per hour.
• C) $1.68 per hour.
• D) $2.50 per hour.

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