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The local utility company charges ABC Company at a mixed cost utility rate: an annual fee plus a variable cost for each kilowatt of power
The local utility company charges ABC Company at a mixed cost utility rate: an annual fee plus a variable cost for each kilowatt of power the company uses. Utility usage and costs are as follows: 2 a. Use the high-low method to determine the cost flow equation for ABC 's utility costs. Show your work. b. It takes approximately 8,000 kilowatt hours of electricity for ABC company to make one unit of product. ABC expects to make 25 units of product in 2014 . Using the high low method, predict the total utility costs at the projected level of usage for 2014. Show your work (show the total cost equation). 3 Use Least-Squares Regression to find a cost function for utilities, as follows: a. Use the SLOPE function and the INTERCEPT function in EXCEL to determine the cost function for utilities (Use formula builder if you are not familiar with these functions). b. Use your cost equation and the total predicted number of kilowatt hours needed in 2014 to estimate the utility costs for 2014. 4 Compare and contrast the results, advantages, disadvantages, and accuracy of the three methods used above to estimate costs (the scattergraph, high-low, and least-squares regression methods). Which method do you recommend that ABC Company use
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