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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?
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