Q 135

Machine hours and electricity costs for Wells Industries for the year were as follows: Machine Electricity Month Hours Costs January 2,000 $9,200 February 2,320 10,500 March 1,520 6,750 April 2,480 11,500 May 3,040 14,125 June 2,640 11,000 July 3,280 12,375 August 2,800 11,375 September 1,600 7,750 October 2,960 13,000 November 3,760 15,500 December 3,360 13,875 Required: A. Using the high-low method, develop an estimate of variable electricity costs per machine hour. B. Using the high-low method, develop an estimate of fixed electricity costs per month. C. Using the high-low method, develop a cost function for monthly electricity costs. D. Estimate electricity costs for a month in which 5,000 machine hours are worked.

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