Q5 N

Student Mark: Question Five Allocated Mark (10) Q5: Manama Company manufactures major appliances. Because of growing interest in its products, it has just had its most successful year. In preparing the budget for next year, its controller compiled the following information: Month Volume in Machine hours Elect. Cost July 3,500 $13,400 Page 5 of 7 August September October November December 3,200 4,100 5,100 5,300 4,800 13,500 16,000 18,300 18,200 17,500 Required: 1- Using the high-low method, determine the variable electricity cost per machine hour and the monthly fixed electricity cost. Estimate the total variable electricity costs and fixed electricity costs if 4600 machine hours are projected to be used next month. [4 Marks] 2- Using the scatter diagram method, determine the variable electricity cost per machine hour and the monthly fixed electricity cost. Estimate the total variable electricity costs and fixed electricity costs if 4600 machine hours are projected to be used next month. (You should use Excel to graph the data. Copy your chart and paste below). [4 Marks) 3- Which Cost estimation method more accurate; the high low method or the scatter diagram method? Explain your answer. [2 marks] Answer Feedback to the student