Question
Sunripe Inc. is a highly successful apple grower in the Okanagan. An important share of the companys revenues is attributed to the production and sale
Sunripe Inc. is a highly successful apple grower in the Okanagan. An important share of the companys revenues is attributed to the production and sale of apple juice. Apples store well in refrigerated rooms which allows for a relatively uniform production throughout the year. The following electricity costs have been recorded for 2020:
Month | Litres of Juice Produced | Electricity Costs |
January | 35,000 | $23,400 |
February | 21,000 | 22,100 |
March | 22,000 | 19,000 |
April | 24,000 | 22,450 |
May | 30,000 | 22,900 |
June | 32,000 | 23,350 |
July | 40,000 | 28,000 |
August | 30,000 | 22,800 |
September | 30,000 | 23,000 |
October | 28,000 | 22,700 |
November | 41,000 | 24,100 |
December | 39,000 | 24,950 |
Required:
- Use the high-low method to estimate Sunripes electricity cost behavior and express it in equation form.
- Use the least-squares regression method to estimate Sunripes electricity cost behavior and express it in equation form.
- Using the two methods above, predict the energy cost for a month in which 26,000 liters of apple juice are produced.
- Which method would you recommend Sunripe use for estimating its costs? Explain your answer.
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