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Alpha Company believes the number of machine hours used directly affects their total electricity costs. Machine hours and electricity costs for 2004 were as follows.
1. Using the high-low method based on machine hours, develop an estimate of variable electricity costs per machine hour. (Do not throw out any outliers, if present.)
2. Using the high-low method based on machine hours, develop an estimate of fixed electricity costs per month. (Do not throw out any outliers, if present.)
3. Using the your answers to 1, and 2. (Above), write the cost formula for estimating monthly electricity costs for Alpha Company (in the format Y = a + bX).
4. Using your answer to 3. (Above), estimate the electricity costs for a month in which 400 machine hours are used.
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