Question
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
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 | 35,000 | $23,400 |
| February | 21,000 | $22,100 |
| March | 22,000 | $22,000 |
| April | 24,000 | $22,450 |
| May | 30,000 | $22,900 |
| June | 32,000 | $23,350 |
| July | 40,000 | $28,000 |
| August | 30,000 | $22,800 |
| September | 30,000 | $23,000 |
| October | 28,000 | $22,700 |
| November | 41,000 | $24,100 |
| December | 39,000 | $24,950 |
|
|
|
1. Use the high-low method to estimate the companys energy cost behavior and express it in
equation form.
2. Predict the energy cost for a month in which 26,000 pints of applesauce are produced.
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
