Estimating a cost function, high - low method objectives.

Pierre's Restaurant wants to find an equation to estimate monthly utility costs. Pierre's Restaurant has been in business for once year and has collected the following cost data for utilities:

Month Electricity bill Kilowatt hrs used Telephone bill Telephone mins used Water bill Litres of water used

Jan $360 1200 $92.00 1100 $60 30560

Feb $420 1400 $91.20 1060 $60 26800

Mar $549 1830 $94.80 1240 $60 31450

Apr $405 1350 $89.60 980 $60 29965

May $588 1960 $98.00 1400 $60 30568

Jun $624 2080 $98.80 1440 $60 25540

Jul $522 1740 $93.40 1170 $60 32690

Aug $597 1990 $96.20 1310 $60 31222

Sep $630 2100 $95.60 1280 $60 33540

Oct $615 2050 $93.80 1190 $60 31970

Nov $594 1980 $91.00 1050 $60 28600

Dec $633 2110 $97.00 1350 $60 34100

Required

1) Which of the above costs is variable ? Fixed ? Mixed ? Explain.

2) Using the high-low method, determine the cost function for each cost.

3) Combine the information above to get a monthly utility cost function for Pierre's.

4) Next month, Pierre's Restaurant expects to use 2200 kilowatt-hours of electricity, make 1500 minutes of telephone calls and use 32000 litres of water. Estimate total cost of utilities for the month.