High-Low Method

1. Emily is the manager of a small manufacturing company. She has retained your services to help her set up a budget for the next year of operations. Her peak month is September leading up to Christmas orders. In that month, she found that she is spending $40,480 on her utility bills, her low month happens in February and she is only spending $32,100. Her hours of production for the month of February are relatively low at 1,470 operating hours. However, in September the factory is running 2,285 hours. Assist Emily in the following:

1. Calculate the variable rate per machine hour and Emilys total fixed cost utility cost. (4 points)
2. Predict total estimated cost if Emily were to have the following estimated operating hours: 975 hours, 1,375 hours, and 1,980 hours respectively. (6 points)