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High-low method. Wayne Mueller, financial analyst at CELL Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Mueller collects the following data
High-low method. Wayne Mueller, financial analyst at CELL Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Mueller collects the following data on machine-hours worked and utility costs for the past 8 quarters: Machine Hours Quarter 1 2 120,000 75,000 110,000 150,000 Utility Costs $215,000 150,000 200,000 270,000 3 4 5 6 90,000 140,000 130,000 100,000 170,000 250,000 225,000 195,000 7 8 1. Estimate the cost function for the quarterly data using the high-low method. 2. Mueller anticipates that CELL will operate machines for 125,000 hours in quarter 9. Calculate the predicted utility costs in quarter 9 using the cost function estimated in requirement 1
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