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The following data related to Jenel Company's utility costs for the past 6 months are as follows (based on kilowatt hours (kWh)):
kWhs Total cost ($)
120 4,000
200 6,500
150 4,750
180 5,600
220 7,200
175 5,350
Required:
Question 1: · Using high low method, determine the cost formula for utility costs of the company. Determine the variable component per hour and the total fixed cost associated to it.
Question 2: Using your answers on the first requirement, compute for the expected total cost of the company if they projected their kilowatt hours used at 135 hours.
Question 3: · Using your answers on the first requirement, how many kWhs will the company expect to use if they budgeted their next month's utility costs at $5,280?
Question 4: Compute the variable and fixed component of the utility costs of Jenel using least squares analysis and derive the cost formula based on your computations.
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