managerial accounting 8 ed

Project Description:

abc machine shop, inc. has compiled the following data to analyze utility costs for the past year:



month machine hours utility costs



jan 575 $ 695

feb 730 865

march 870 915

april 950 975

may 250 375

june 375 515

july 450 555

aug 460 565



required:
1.determine the fixed and variable costs using:
1.scattergraph method (p. 88-90)
2.high-low method (p. 91-94)


2.determine the cost formula using both methods. (p. 85-86)


3.within the relevant range, can the formula be reliably used to predict utility costs?

can the a and b values in the cost formula be interpreted as fixed and variable costs? why or why not?


4.using both formulas predict the utility cost in a month that uses 800 machine hours. (see example p.99
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