Share
Explore BrainMass

High-Low Method on estimating cost behavior

Gentlemen produces and packages his own brand applesauce. A high low cost behavior needs to happen on the inventory on the company's energy cost behavior.

Month Pints of applesauce produced Energy cost
Jan. 35,000 $23,400
Feb. 21,000 22,100
Mar. 22,000 22,000
Apr. 24,000 22,450
May 30,000 22,900
Jun. 32,000 23,350
Jul. 40,000 28,000
Aug. 30,000 22,800
Sep. 30,000 23,000
Oct. 28,000 22,700
Nov. 41,000 24,100
Dec. 39,000 24,950

a. Figure the high-low method to estimate the company's energy cost behavior and express it in equation form.

b. Predict the enery cost for a month in which 26,000 pints of applesauce are produced.

Solution Preview

a. Figure the high-low method to estimate the company's energy cost behavior and express it in equation form.

Highest Applesauce produced = 41,000 ; asociated energy cost = 24,100
Lowest ...

$2.19