Estimate the company electricity cost behavior

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Reference no: EM132620321

Blue is the accountant for Super Tasty Bakery. He has been asked by senior management to provide an estimate of Electricity cost using high low method. Blue has identified machine hours as the most suitable cost driver. The following costs were incurred during the previous 5 months.

Month            Machine Hours            Electricity costs

January            60,000                     35,200

February            22,000                    34,000

March                 33,000                   31,100

April                     45,000                  37,350

May                        50,000                  36,000

Question 1. Use the high low method to estimate the company's electricity cost behavior and express it in an equation form?

Question 2. Using a graph plot the cost function and label a, b, x and y?

Question 3. Predict the electricity cost for the month in which 62 000 machine hours are used?

Reference no: EM132620321

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