High-low method determining an equation for electricity

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High-low method, determining an equation for electricity cost, Forecasting electricity cost at a volume using such equation.

Westminster Company has had the following experience over the past five quarters:

Units produced

Electricity cost ($)

27,000

101,000

32,000

120,000

31,000

116,000

20,000

84,000

22,000

90,000

a) Using the high-low method, determine an equation for electricity cost (Y) as a function of units produced (X).  Assume a linear function.

b) Using your equation, forecast electricity cost at a volume of 29,000 units produced.

Reference no: EM13356031

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