The following information is available for a company's utility cost for operating its machines over the last four months.

Month Machine hours Utility cost
January 1,020 $6,570
February 1,920 $7,140
March 2,640 $8,100
April 720 $4,500

Using the high-low method, the estimated variable cost per machine hour for utilities is:

Using the high-low method, the estimated variable cost per machine hour for utilities is $1.875/ machine hour

Explanation:

High Low Method is a method used to separate Fixed and Variable Costs Components of a semi-variable cost/overhead.

Step 1 : Establish 2 points - The Highest and The Lowest

High - March 2,640 hrs : $8,100

Low - April 720 hrs : $ 4,500

Step 2 Calculate the variable Cost Component

Variable Costs = Overhead Cost difference /Activity difference

                        = ($8,100-$4,500)/(2,640hrs-720hrs)

                        = $3,600/1,920hrs

                        = $1.875/hr

D.  (-infinity, 2)

This is the interval

On this interval, the function curve is going downhill as you read it from left to right.

More technically, the function is decreasing on this interval because f(a) > f(b) where a < b. For example, f(0) > f(2) and note that 0 < 2.