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Joe Natal is a farmer who produces and packages applesauce. Apples can be stored for several months in cold storage, so applesauce production is
Joe Natal is a farmer who produces and packages applesauce. Apples can be stored for several months in cold storage, so applesauce production is relatively uniform throughout the year. The recently hired controller for the firm is about to apply the high-low method in estimating the company's energy cost behavior. The following costs were incurred during the past 12 months: (3 + 3 = 6 points) Month January February Pints of applesauce produced Energy cost 105,000 $70,200 63,000 66,300 March 66,000 66,000 April 72,000 67,350 May 90,000 68,700 June 96,000 70,050 July 120,000 84,000 August 90,000 68,400 September 90,000 69,000 October 84,000 68,100 November 123,000 72,300 December 117,000 74,850 a) Use the high-low method to estimate the company's energy cost behavior and express it in equation form. b) Predict the energy cost for a month in which 78,000 pints of applesauce are produced.
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