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Madison Company manufactures major appliances. Because of growing interest in its products, it has just had its most successful year. In preparing the budget for next year, its controller compiled the following information:
Month
Volume in Machine Hours
Electricity Cost
July
6,000
$ 60,000
August
5,000
53,000
September
4,500
49,500
October
4,000
46,000
November
3,500
42,500
December
3,000
36,000
Six-month total
26,000
$287,000
Using the high-low method, determine the variable electricity cost per machine hour and the monthly fixed electricity cost. Estimate the total variable electricity costs and fixed electricity costs if 4,800 machine hours are projected to be used next month.
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Value the cost of the acquisition
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