High-low method Ken Howard, financial analyst at JVR Corporation, is examining the behavior of quarterly maintenance costs for budgeting purposes. Howard collects the following data on machine-hours worked and maintenance costs for the past 12 quarters:

1. Estimate the cost function for the quarterly data using the high-low method.

2. Plot and comment on the estimated cost function.

3. Howard anticipates that JVR will operate machines for 90,000 hours in quarter 13. Calculate the predicted maintenance costs in quarter 13 using the cost function estimated in requirement1.

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Machine-Hours Quarter Maintenance Costs 90,000 S185,000 110,000 220,000 100,000 200,000 4 120,000 240,000 85,000 170,000 215,000 105,000 195,000 95,000 235,000 115,000 95,000 190,000 225,000 115,000 105,000 10 180,000 250,000 11 12 125,000 2.