High-low method-construct cost formula for electricity cost

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Reference no: EM131261469

Arcadia Company incurred the following costs and machine hours during the first three months of the current year. Assume that the driver for all costs is machine hours.

Type of cost January February March

Electricity $20,000 $15,000 $18,000

Depreciation 15,000 15,000 15,000

Factory supplies 9,600 5,600 7,600

Property taxes 12,000 12,000 12,000

Machine hours 1,200 700 950

Required:

A. Using the high-low method, construct a cost formula for electricity cost.

B. If Arcadia had total costs in April of $53,000, how many machine hours did they incur during April?

C. If Arcadia expects to incur 1,500 machine hours in May what would be the estimate of their total costs?

Reference no: EM131261469

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