Tijuana Tile has gathered the following information on its utility costs for the past six months.

Machine Hours Utility Cost

1,300 ......$ 940

1,700 ......1,075

1,250 ....... 900

1,800 ......1,132

1,900 ......1,160

1,500 ...... 990

a. Using the high–low method, determine the cost formula for utility costs.

b. Prepare a flexible budget with separate variable and fixed categories for utility costs at 1,325, 1,500, and 1,675 machine hours.