The following information is available about electricity costs for the first six months of the year. Management think that electricity costs are likely to be related to how long machines are running. Month Machine hours Electricity Cost January 2,800 $2,925 February 5,600 $5,526 March 6,200 $5,980 April 3,500 $3,620 May 2,300 $2,470 June 4,500 $4,450 You may wish to refer to the formula sheet to answer this question. If you haven't already downloaded it, you can download it here.
The following information is available about electricity costs for the first six months of the year. Management think that electricity costs are likely to be related to how long machines are running. Month Machine hours Electricity Cost January 2,800 $2,925 February 5,600 $5,526 March 6,200 $5,980 April 3,500 $3,620 May 2,300 $2,470 June 4,500 $4,450 You may wish to refer to the formula sheet to answer this question. If you haven't already downloaded it, you can download it here.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...
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The following information is available about electricity costs for the first six months of the year. Management think that electricity costs are likely to be related to how long machines are running.
|
Machine |
Electricity |
January |
2,800 |
$2,925 |
February |
5,600 |
$5,526 |
March |
6,200 |
$5,980 |
April |
3,500 |
$3,620 |
May |
2,300 |
$2,470 |
June |
4,500 |
$4,450 |
You may wish to refer to the formula sheet to answer this question. If you haven't already downloaded it, you can download it here.
Required:
Using the high-low method,
In July the firm plans to use 5,400 machine hours. Estimate the electricity cost using your equation from (c). (3 marks)
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