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Estimate the cost behaviour for complex electricity costs

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Reference no: EM132523861

Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month. The electricity costs and hours of operation for past six months is listed below:

Month                     Total hours of operation                         Total electricity cost

January                                 650                                          $ 4 240

February                                  700                                           $ 4 400

March                                       800                                           $ 4 800

April                                         600                                               $ 4 200

May                                            550                                             $ 3 700

June                                            500                                            $ 3 600

Required:

Question 1: Use the high-low method to estimate the cost behaviour for the complex's electricity costs, assuming that the variable costs vary in proportion to the hours of operation. Express the total cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of operation?

Reference no: EM132523861

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