Blue Company's activity for the first six months of the current year is as follows: Machine Hours Electrical Cost

January 2,000 3,000

February 3,500 5,500

March 2,400 4,000

April 1,600 2,400

May 1,500 2,500

June 2,100 3,500

INSTRUCTIONS: a) Using the high-low method, what is the variable cost per machine hour?

b) Using the high-low method, what is the fixed portion of the electrical cost each month?

c) What would be the expected total electrical costs if the month of July was anticipated to use 3,000 machine hours?

d) What would be the expected total electrical costs if the month of August was anticipated to use 6,000 machine hours? Briefly explain your answer. (