Look at Figure 1.5 Answer the following questions:

A. Is power consumption a fixed or variable cost, why?

B. Lay out the equation of calculating the power consumption based on unit of products. Please provide the accurate number.

FIGURE 1.5 Consumption of Power Graph kWh 10 9 8- 6 (Thousands) Extentions of Known Data 4 2- 1 0 200 400 600 800 Units 18 Budgeting for Operations CHAPTER 1 conditions, historical data become more difficult to use in pro- jecting the future. The use of the data encourages performance that improves on the past performance. The effects of inflation are properly considered. Further practical points in the use of historical data include: Avoid using historical data more than 12 months old in periods of high inflation or deflation. Be consistently objective. Do not bias the data by summarily rejecting data that seem to be out of line. There may be a reason for unusual numbers. Be creative; try not to be bound by traditional thinking. Some of the relationships between costs and activities may not seem direct and quantifiable. This could be the result of delayed billings or nontraditional billings. . Consider and try using moving averages for data that tend to be nonlinear or scattered. Use extrapolation to project data for future estimated produc- tion or service levels. Never use tools past the point that common sense tells you is meaningful