Dancer Company has noticed that utility bills are substantially higher when the average monthly temperature is colder. The only thing in the shop that uses natural gas is the furnace. Because of prevailing low temperatures, the furnace is used every month of the year (though less in the summer months and very little in August). Everything else in the shop runs on electricity, and electricity use is fairly constant throughout the year.

For a year, Dancer has been recording the average daily temperature and the cost of its monthly utility bills for natural gas and electricity.

Average Temperature (degree Fahrenheit)

Month Utility Cost

January 31 $1,760

February 41 1,629

March 43 543

April 44 410

May 46 275

June 50 233

July 53 220

August 60 210

September 50 305

October 40 530

November 30 750

December 10 870

Required

1. Use the high low method to find the equation for estimating the cost of utilities.
2. Estimate the utility cost for the upcoming month of January if the estimated average temperature is 26 degrees.
3. Using Excel find the regression equation for estimating the cost of utilities. You may calculate the simple linear regression from the charting function, the Excel formulas, or the regression function in the analysis toolpak.