Reference: 06-07
Gargymal Company Would Like to Estimate the Variable

question 82

Multiple Choice

Reference: 06-07
Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations. $$\begin{array} { | l | l | l | } \hline & \text { Machine Hours } & \text { Electrical Cost } \\\hline \text { August } & 1,000 & \$ 1,550 \\\hline \text { September } & 900 & 1,510 \\\hline \text { October } & 1,500 & 1,750 \\\hline \text { November } & 2,000 & 1,950 \\\hline \text { December } & 1,300 & 1,670 \\\hline\end{array}$$
-Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to?

• A)$1,290.00.
• B)$1,150.00.
• C)$1,306.50.
• D)$870.00.

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Definitions:

Four-period Centered Moving Averages

A technique used to smooth out data series to identify the underlying trend, calculated by averaging each set of four consecutive data points.

Time Periods

Distinct intervals of time that can have varying lengths and are often used for measurement, analysis, or comparison purposes.

Seasonal Variation

Fluctuations in statistical or economic data that occur at regular intervals due to seasonal patterns.

Random Variation

The inherent unpredictability in the outcomes of a process, often analyzed in statistical contexts to understand or model data.