Highland Exports wants to find an equation to estimate monthly utility costs. Highland Exports has been in business for 1 year and has collected the following cost data for utilities:

Required
1. Which of the preceding costs is variable? Fixed? Mixed? Explain.
2. Using the high– low method, determine the cost function for each cost.
3. Combine the preceding information to get a monthly utility cost function for Highland Exports.
4. Next month, Highland Exports expects to use 2,200 kilowatt hours of electricity, make 1,500 minutes of telephone calls, and use 32,000 gallons of water. Estimate total cost of utilities for the month.
5. If you are the manager relying on the cost function determined in requirement 3 to accurately predict costs, what additional concerns would you have when using the high– low method of costestimation?

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Kilowatt Hours Used 1,100 1,300 1,740 1,020 1,840 1,950 1,830 2,010 Telephone Month January February March April Gallons of Telephone Bill Minutes Usd WaterBill Water Used Electricity Bill 770 910 $1,218 714 $1,288 $1,365 $1,281 $1,407 $122.00 $125.30 $142.50 $134.00 $152.00 $157.00 $140.00 $147.60 1,100 1,060 1.240 980 1,400 1,440 $120 $120 $120 $120 $120 $120 $120 $120 30,560 26,800 31,450 29,965 30,568 25,540 32,690 31,222 June July August 1,310