Jonathan Macintosh is a highly successful Pennsylvania orchardman who has formed his own company to produce and package applesauce. Apples can be stored for several months in cold storage, so applesauce production is relatively uniform throughout the year. The recently hired controller for the firm is about to apply the high-low method in estimating the company's energy cost behavior. The following costs were incurred during the past 12 months:

Month                        Pints of Applesauce Produced         Energy Cost

January                       35,000                                                 $23,400

February                     21,000                                                 22,100

March                         22,000                                                 22,000

April                           24,000                                                 22,450

May                             30,000                                                 22,900

June                             32,000                                                 23,350

July                             40,000                                                 28,000

August                        30,000                                                 22,800

September                   30,000                                                 23,000

October                       28,000                                                 22,700

November                   41,000                                                 24,100

December                   39,000                                                 24,950

Required:

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

2. Predict the energy cost for a month in which 24,500 pints of applesauce are produced.

3. Draw a scatter diagram and explain the correlation, if exist, between the production of a pint of apple sauce and the energy cost.