Question
A companys electricity cost is a mixed cost - partly fixed and partly variable. If during the month with the largest electricity use the company
A companys electricity cost is a mixed cost - partly fixed and partly variable. If during the month with the largest electricity use the company used 15,000 machine hours and had an electricity cost of $36,000 and during the month with the smallest electricity use the company used 7,000 machine hours and had an electricity cost of $20,000.
Its variable cost per machine hour (as determined by the high-low method) would be ____________
Its fixed cost per month (as determined by the high-low method using the high numbers) would be _____________________
Its fixed cost per month (as determined by the high-low method using the low numbers) would be _____________________
Write the equation for estimating the monthly electricity cost.
What would you estimate would be the electricity cost for a month when 9,000 machine hours were used?
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