25) Cari’s Locker Service ran its freezer in January, a slow month, for 200 hours for a total cost of $60,000. In June, a peak month, the freezer ran for 1,000 hours for a total cost of $92,000.

 

Required:

Using the high-low method determine the average cost of running the machine one hour in a month were the freezer ran for 800 hours?

26) A cost analyst collected the following information for the Machining Department:

 

ObservationMachine-hoursTotal Operating Costs

July8,000$60,000

August9,20066,000

September7,60061,000

October8,80064,000

November9,00065,000

 

Required:

a.Determine the estimating cost function with machine-hours as the cost driver. Use the high-low method.

b.If December’s estimated machine-hours total 8,400, what is the estimated cost of the Machining Department?

 

 

 



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