The high-low method will be used to develop a cost formula, Ask an Expert

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Information about Indiana Industrial's utility cost for the last six months of 2010 follows. The high-low method will be used to develop a cost formula to predict 2011 utility charges, and the number of machine hours has been found to be an appropriate cost driver. Data for the first half of 2010 are not being considered because the utility company imposed a signifi cant rate change as of July 1, 2010.

Month Machine Hours Utility Cost
July 33,750 $13,000
August 34,000 12,200
September 33,150 11,040
October 32,000 11,960
November 31,250 11,500
December 31,000 11,720

a. What is the cost formula for utility expense?

b. What is the budgeted

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9443975

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