a. Determine the fixed- and variable-cost components using the high-low method

b. What electricity cost does the cost equation estimate for a level of activity of 500 machine hours? By what amount does this differ from March's observed cost for 500 machine hours?  

c. What electricity cost does the cost equation estimate for a level of activity of 700 machine hours? By what amount does this differ from June's observed cost for 700 machine hours

 

P5.1A (LO 1, 2), AP The controller of Rather Production has collected the following monthly expense data for analyzing the cost behavior of electricity costs. January February March April May 10 June July August September October November December Total Electricity Costs $2,500 3,000 3,600 4,500 3,200 ha blinu (1) nog 400 4,900 700 4,100 650 3,800 520 gollim 680 5,100 4,200 3,300 5,860 Total Machine Hours automs 300 350 500 690 630 350 720