Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 17

Cost Estimation, High-Low Method Antelope Park Amoco (APA) in Antelope Park, Alaska, has noticed that utility bills are substantially higher the colder the average monthly temperature is. The only thing in the shop that uses natural gas is the furnace. Because of prevailing low temperatures, the furnace is used every month of the year (though less in the summer months and very little in August). Everything else in the shop runs on electricity, and electricity use is fairly constant throughout the year.
For a year, APA has been recording the average daily temperature and the cost of its monthly utility bills for natural gas and electricity.
Required Use the high-low method to estimate utility cost for the upcoming months of January and February. The forecast for January is a near record average temperature of 10°F; temperatures in February are expected to average 40°F.