The Following Six Months of Data Were Collected on Electricity

question 184

Essay

The following six months of data were collected on electricity cost and the number of machine hours in a factory.
Electricity Machine
Month cost hours
June $25,160 4,500
July 26,170 4,810
August 27,250 5,120
September 26,680 5,010
October 27,950 5,430
November 27,500 5,190
Required:
A. Using the high-low method, calculate the variable rate for the electricity cost.
B. Using the high-low method, calculate the fixed cost of electricity.
C. Estimate the total electricity cost to be incurred in December if 5,300 machine hours are incurred.

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Definitions:

Legal

Pertaining to the law or the legal system, encompassing various legal matters, processes, and institutions.

Direct Financing Lease

A leasing arrangement where the lessor purchases an asset and leases it to the lessee, effectively acting as a financier by not transferring ownership.

Operating Lease

An agreement permitting the utilization of a property without transferring ownership rights to it.

Lessor

The party in a lease agreement that owns the asset and grants the lessee the right to use the asset in return for lease payments.