Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month.The electricity costs and hours of operation for past six months is listed below:Month Total hours of operation Total electricity costJanuary 650 $ 4,240February 700 $ 4,400March 800 $ 4,800April 600 $ 4,200May 550 $ 3,700June 500 $ 3,600Required:a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,assuming that the variable costs vary in proportion to the hours of operation. Express the totalcost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour ofoperation?
Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month.The electricity costs and hours of operation for past six months is listed below:Month Total hours of operation Total electricity costJanuary 650 $ 4,240February 700 $ 4,400March 800 $ 4,800April 600 $ 4,200May 550 $ 3,700June 500 $ 3,600Required:a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,assuming that the variable costs vary in proportion to the hours of operation. Express the totalcost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour ofoperation?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter1: Introduction To Managerial Accounting
Section: Chapter Questions
Problem 1MAD: Comfort Plus, Inc., has a hotel with 300 rooms in a metropolitan city. Its main competitor, Connors...
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Question
Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month.
The electricity costs and hours of operation for past six months is listed below:
Month Total hours of operation Total electricity cost
January 650 $ 4,240
February 700 $ 4,400
March 800 $ 4,800
April 600 $ 4,200
May 550 $ 3,700
June 500 $ 3,600
Required:
a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,
assuming that the variable costs vary in proportion to the hours of operation. Express the total
cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of
operation?
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