Question
The controller of Pharoah Industries has collected the following monthly expense data for analyzing the cost behavior of electricity costs. Total Electricity Costs Total Machine
The controller of Pharoah Industries has collected the following monthly expense data for analyzing the cost behavior of electricity costs.
Total Electricity Costs | Total Machine Hours | |||||||
January | $1,910 | 300 | ||||||
February | 3,000 | 330 | ||||||
March | 3,380 | 480 | ||||||
April | 4,610 | 695 | ||||||
May | 3,190 | 500 | ||||||
June | 4,960 | 790 | ||||||
July | 4,150 | 640 | ||||||
August | 3,930 | 540 | ||||||
September | 5,090 | 680 | ||||||
October | 4,230 | 620 | ||||||
November | 3,280 | 330 | ||||||
December | 6,170 | 810 |
(a) Determine the fixed- and variable-cost components using regression analysis (We recommend the use of Excel.) (Round fixed cost to 3 decimal places e.g. 1.252 and variable cost to 5 decimal places e.g. 1.25125.)
Fixed costs | $ | |
Variable-cost | $ |
(c) What electricity cost does the cost equation estimate for a level of activity of 480 machine hours? (Round answer to 2 decimal places e.g. 1.25.)
Electricity costs | $ |
By what amount does this differ from Marchs observed cost for 480 machine hours? (Round answer to 2 decimal places e.g. 1.25.)
Amount differ | $ |
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