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10-35 High-low method. Wayne Mueller, financial analyst at CELL Corporation, is examining the behav ior of quarterly utility costs for budgeting purposes. Mueller collects the
10-35 High-low method. Wayne Mueller, financial analyst at CELL Corporation, is examining the behav ior of quarterly utility costs for budgeting purposes. Mueller collects the following data on machine-hours worked and utility costs for the past 8 quarters Utility Costs $215,000 150,000 200,000 270,000 170,000 250,000 225,000 195,000 Quarter Machine-Hours 120,000 75,000 110,000 150,000 90,000 140,000 130,000 100,000 1. Estimate the cost function for the quarterly data using the high-low method 2. Plot and comment on the estimated cost function 3. Mueller anticipates that CELL will operate machines for 125,000 hours in quarter 9. Calculate the pre dicted utility costs in quarter 9 using the cost function estimated in requirement 1
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