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 $3,018 15,239

April 2,628 9,504

May 2,857 11,534

June 3,730 18,045

a. $0.86

b. $1.42

c. $0.13

d. $0.90

Variable cost per hour = $0.13

Explanation:

Giving the following information:

March $3,018 15,239

April 2,628 9,504

May 2,857 11,534

June 3,730 18,045

To calculate the unitary variable cost under the high-low method, we need to use the following formula:

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

Variable cost per unit = (3,730 - 2,628) / (18,045 - 9,504)

Variable cost per unit = $0.13 per hour