Highland Exports wants to find an equation to estimate monthly utility costs. Highland Exports has been in business for 1 year and has collected the following cost data for utilities:

1. Which of the preceding costs is variable? Fixed? Mixed? Explain.
2. Using the high– low method, determine the cost function for each cost.
3. Combine the preceding information to get a monthly utility cost function for Highland Exports.
4. Next month, Highland Exports expects to use 2,200 kilowatt hours of electricity, make 1,500 minutes of telephone calls, and use 32,000 gallons of water. Estimate total cost of utilities for the month.
5. If you are the manager relying on the cost function determined in requirement 3 to accurately predict costs, what additional concerns would you have when using the high– low method of costestimation?

  • CreatedJanuary 15, 2015
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