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

		Total Electricity Costs				Total Machine Hours
January			$2,500				300
February			3,000				350
March			3,600				500
April			4,500				690
May			3,200				400
June			4,900				700
July			4,100				650
August			3,800				520
September			5,100				680
October			4,200				630
November			3,300				350
December			5,860				720

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

b) What electricity cost does the cost equation estimate for a level of activity of 500 machine hours? By what amount does this differ from Marchs observed cost for 500 machine hours?

c) What electricity cost does the cost equation estimate for a level of activity of 700 machine hours? By what amount does this differ from Junes observed cost for 700 machine hours?