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Question 2 (answer requirements a, b and c 4points for part a, 4 points for part b, 4 points for part c) Management believes that
Question 2 (answer requirements a, b and c 4points for part a, 4 points for part b, 4 points for part c) Management believes that their electrical cost is a mixed cost that depends on machine-hours Machine-Electrical Cost March April Ma June Jul August September 467 October November Hours 413 506 435 486 499 461 $7,371 $7,740 $7,447 $7,660 $7,704 $7,563 $7,571 $7,522 403 Required a. Use the high-low method to estimate the variable and fixed components of this cost. 10 b. What is the cost estimation formula for this company? 12 458 425 c. Do you think the cost formula in part B would be accurate in estimating total costs at 485 machine hours? If so, what would be the estimated total cost? If the formula would not be useful, explain 15 16 17
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