Question
Adam Branson, financial analyst at SQR Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Branson collects the following data on machine-hours
Adam Branson, financial analyst at SQR Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Branson
collects the following data on machine-hours worked and utility costs for the past 8 quarters:
LOADING...
(Click the icon to view the data.)
Read the requirements
LOADING...
.
| Quarter | Machine-Hours | Utility Costs | ||
| 1 | 115,000 | $225,000 | ||
| 2 | 70,000 | 160,000 | ||
| 3 | 105,000 | 210,000 | ||
| 4 | 120,000 | 240,000 | ||
| 5 | 85,000 | 180,000 | ||
| 6 | 110,000 | 220,000 | ||
| 7 | 100,000 | 235,000 | ||
| 8 | 95,000 | 205,000 | ||
Requirements:
1. Estimate the cost function for the quarterly data using the high-low method.
2. Plot and comment on the estimated cost function.
3.Branson anticipates that SQR will operate machines for 120,000 hours in quarter 9. Calculate the predicted utility costs in quarter 9 using the cost function estimated in requirement 1.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Introduction to Managerial Accounting
Authors: Peter Brewer, Ray Garrison, Eric Noreen
7th edition
978-0078025792
