High-low method; flexible budget
Tijuana Tile has gathered the following information on its utility cost for the past six months.
Machine Hours Utility Cost 1,270 $1,015 1,690 1,211 1,220 974 1,780 1,286 1,920 1,338 1,570 1,147
a. Using the high-low method, determine the cost formula for utility cost. If required, round your answer for variable cost to the nearest cent.
Use this rounded variable cost amount to calculate the fixed cost, and then round your answer for fixed cost to the nearest dollar.
y = $ + $ mach. hr.
b. Prepare a flexible budget with separate variable and fixed categories for utility cost at 1,325, 1,475, and 1,625 machine hours. Use the rounded values from part (a.) in your calculations.