Jonathan Macintosh is a highly successful Pennsylvania orchardman who has formed his own company to produce and package 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 companys energy cost behavior. The following costs were incurred during the past 12 months:

Month Pints of Applesauce Produced Energy Cost

January 106,000 $ 70,300

February 64,000 64,000

March 67,000 66,200

April 73,000 67,500

May 91,000 68,800

June 97,000 70,100

July 121,000 70,000

August 91,000 68,500

September 91,000 69,100

October 85,000 68,200

November 124,000 72,400

December 118,000 71,250

Required:

1. Use the high-low method to estimate the companys energy cost behavior and express it in equation form. Use the formula Y = a + bX, where Y denotes energy cost for a month and X denotes pints of applesauce produced.

2. Predict the energy cost for a month in which 75,000 pints of applesauce are produced.