Response to the following problem:
Tools Are Us Corporation produces toolboxes used by construction professionals and homeowners. The company is concerned that it does not have an understanding of its utility consumption. The company's president, George, has asked the plant manager and cost accountant to work together to get information about their utilities cost. The two of them accumulated the following data for the past 14 months (production volume is presented in units):
Production Utility Cost
January 113,000 $1,712
February 114,000 1,716
March 90,000 1,469
April 110,000 1,600
May 112,000 1,698
June 101,000 1,691
July 104,000 1,700
Required:
A. Use the high/low method to determine the company's utility cost equation. When required, carry the amount out to three decimal places.
B. What would be the expected utility cost of producing 120,000 units? (The relevant range is 85,000 to 125,000 units of production.)