Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month. The electricity costs and hours of operation for past six

Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month. The electricity costs and hours of operation for past six months is listed below:

Month Total hours of operation Total electricity cost January 650 $ 4 240 February 700 $ 4 400 March 800 $ 4 800 April 600 $ 4 200 May 550 $ 3 700 June 500 $ 3 600

Required: (a) Use the high-low method to estimate the cost behaviour for the complex's electricity costs, assuming that the variable costs vary in proportion to the hours of operation. Express the total cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of operation?

(b) During July, the complex will open for 570 hours. Predict the complex's total electricity costs for July using the cost estimation method employed in above requirement (a).

(c) What is the main drawback of the high-low method of cost estimation?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Management Concepts And Skills

Authors: Samuel Certo, S Certo

15th global Edition

978-1292265193, 1292265191

More Books

Students also viewed these Accounting questions

Question

What is the cerebrum?

Answered: 1 week ago