Multiple choice

1. Given the following cost and activity observations for Leno Enterprises' utilities, use the high-low method to calculate Leno's variable utilities cost per machine hour.

                     Cost    Machine Hours

September   $4,100        22,000

October             3,700       18,000

November     3,900       19,000

December     4,500       28,000

A) $0.08

B) $4.86

C) $0.25

D) $12.50

2. You have calculated, using the high-low method, a variable cost per machine hour of $0.80 for your production power costs. Power costs at 6,000 machine hours are $5,400; at 9,000 machine hours, they are $7,800. What are the total fixed costs that you would use to estimate production power costs for your company at any level within your relevant range?

A) $600

B) $6,400

C) $2,400

D) $4,800

3. Given the following cost and activity observations for Notwen Company's maintenance costs, use the high-low method to calculate Notwen's monthly fixed costs for maintenance.

                   Cost   Units Produced

January      $130,000     25,000

February180,500     35,000

March        151,100     28,000

A) $11,250

B) $4,550

C) $3,750

D) $2,650

4. Dapper Hat Makers is in the business of designing and producing specialty hats. The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-time employees $250 per week. If the employees make 50 derbies in one week, what is the fixed cost per derby? (Round to two decimal places where necessary.)

A) $4.50

B) $5.00

C) $10.00

D) $14.50