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:
MonthPints of Applesauce ProducedEnergy Cost January 116,000 $71,300 February 74,000 65,000 March 77,000 68,200 April 83,000 69,000 May 101,000 69,800 June 107,000 70,600 July 131,000 71,000 August 101,000 69,500 September 101,000 70,100 October 95,000 69,200 November 134,000 73,400 December 128,000 71,750Required: 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 85,000 pints of applesauce are produced.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started