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Patter Inc. believes their electricity costs are affected by the number of machine-hours worked. Machine hours and electricity costs for 2020 were as follows: Month
Patter Inc. believes their electricity costs are affected by the number of machine-hours worked. Machine hours and electricity costs for 2020 were as follows:
Month | Machine Hours | Electricity Costs |
January | 300 | $ 6,000 |
February | 240 | 4,250 |
March | 580 | 7,750 |
April | 860 | 9,750 |
May | 1040 | 11,250 |
June | 940 | 11,000 |
July | 1140 | 14,000 |
August | 900 | 12,250 |
September | 1240 | 14,250 |
October | 740 | 7,750 |
November | 480 | 7,000 |
December | 380 | 6,500 |
REQUIRED:
- Using the high-low method, develop an estimate of variable electricity costs per machine hour.
- Using the high-low method, develop an estimate of fixed electricity costs per month.
- Using the high-low method, develop a cost formula for monthly electricity costs.
- Estimate electricity costs for a month in which 500 machine hours are worked.
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