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# Problem 5-1AThe controller of Rather Production has collected the following monthly

expense data for analyzing the cost behavior of electricity costs.

Total

Electricity CostsTotal

Machine HoursJanuary\$2,500300February3,000350March3,600500April4,500690May3,200400June4,900700July4,100650August3,800520September5,100680October4,200630November3,300350December5,860720

Determine the fixed- and variable-cost components using the high-low method.

Fixed-costs\$-

Variable-costs\$-

.

What electricity cost does the cost equation estimate for a level of activity of 500 machine hours?

Electricity costs\$-

By what amount does this differ from March's observed cost for 500 machine hours?

Amount differ\$-

SHOW SOLUTION

What electricity cost does the cost equation estimate for a level of activity of 700 machine hours?

Electricity costs\$-

By what amount does this differ from June's observed cost for 700 machine hours?

Variable cost = \$8 Fixed Cost = \$100 Cost for 500 machine... View the full answer

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