Question 17

The controller of Cullumber Production has collected the following monthly expense data for analyzing the cost behavior of electricity costs.

		Total Electricity Costs				Total Machine Hours
January			$2,480				210
February			2,900				340
March			3,520				500
April			4,780				685
May			3,220				420
June			5,000				750
July			4,090				650
August			3,810				510
September			5,110				675
October			4,270				600
November			3,320				340
December			5,840				770

Determine the fixed- and variable-cost components using the high-low method.

Fixed-costs		$
Variable-costs		$

What electricity cost does the cost equation estimate for a level of activity of 500 machine hours?

Electricity costs

$

By what amount does this differ from Marchs observed cost for 500 machine hours?

Amount differ

$

What electricity cost does the cost equation estimate for a level of activity of 750 machine hours?

Electricity costs

$

By what amount does this differ from Junes observed cost for 750 machine hours?

Amount differ

$

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