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Jonathan Macintosh is a highly successful Pennsylvania orchardman who has formed his own company to produce and package applesauce. Apples can be stored for several months in cold storage, so applesauce production is relatively uniform throughout the year. The recently hired controller for the firm is about to apply the high-low method in estimating the company's energy cost behavior. The following costs were incurred during the past 12 months: Month January February March April May June July August September October November December Pints of Applesauce Produced Energy Cost 122,000 80,000 83,000 89,000 107,000 113,000 137,000 107,000 107,000 101,000 140,000 134,000 $71,900 63,200 69,400 69,900 70,400 70.900 71,600 70,100 70,700 69,800 74,000 72,050 Required: 1. Use the high-low method to estimate the company's energy cost behavior and express it in equation form. Use the formula Y= a + bX, where Y denotes energy cost for a month and X denotes pints of applesauce produced. 2. Predict the energy cost for a month in which 91,000 pints of applesauce are produced. Jonathan Macintosh is a highly successful Pennsylvania orchardman who has formed his own company to produce and package applesauce. Apples can be stored for several months in cold storage, so applesauce production is relatively uniform throughout the year. The recently hired controller for the firm is about to apply the high-low method in estimating the company's energy cost behavior. The following costs were incurred during the past 12 months: Month January February March April May June July August September October November December Pints of Applesauce Produced Energy Cost 122,000 80,000 83,000 89,000 107,000 113,000 137,000 107,000 107,000 101,000 140,000 134,000 $71,900 63,200 69,400 69,900 70,400 70.900 71,600 70,100 70,700 69,800 74,000 72,050 Required: 1. Use the high-low method to estimate the company's energy cost behavior and express it in equation form. Use the formula Y= a + bX, where Y denotes energy cost for a month and X denotes pints of applesauce produced. 2. Predict the energy cost for a month in which 91,000 pints of applesauce are produced.
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Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-1259569562
11th edition
Authors: Ronald W. Hilton
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