Star Limited, a management consultancy firm, has operating hours fluctuate from week to week. Its utilities costs and operating hours for the past six weeks are as follow: Week Operating Hours Utilities Cost ($) 1 42 630 2 55 705 3 37 427 33 485 5 39 552 41 637 Required: a) Use the high-low method to estimate the cost behaviour for the company's utilities costs, assuming that variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y = a + bX). b) Star Limited is expected to be operated for 45 hours in next week. Predict the company's total utilities cost for the week
Star Limited, a management consultancy firm, has operating hours fluctuate from week to week. Its utilities costs and operating hours for the past six weeks are as follow: Week Operating Hours Utilities Cost ($) 1 42 630 2 55 705 3 37 427 33 485 5 39 552 41 637 Required: a) Use the high-low method to estimate the cost behaviour for the company's utilities costs, assuming that variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y = a + bX). b) Star Limited is expected to be operated for 45 hours in next week. Predict the company's total utilities cost for the week
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 8E: Estimated income statements, using absorption and variable costing Prior to the first month of...
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