Moresan Co Instructions
Using the High-Low Method of Analyzing Costs Answer the Factory

Essay

Moresan Co. gathered the following information on power costs and factory machine usage for the last six months: $$\begin{array} { l c c } \text { Month } & \text { Power Cost } & \text { Factory Machine Hours } \\ \text { January } & \$ 24,400 & 13,900 \\\text { February } & 30,400 & 17,600 \\\text { March } & 29,000 & 16,800 \\\text { April } & 22,340 & 13,200 \\\text { May } & 19,900 & 11,600 \\\text { June } & 16,900 & 8,600\end{array}$$ Instructions
Using the high-low method of analyzing costs answer the following questions and show computations to support your answers.
(a) What is the estimated variable portion of power costs per factory machine hour?
(b) What is the estimated fixed power cost each month?
(c) If it is estimated that 10000 factory machine hours will be run in July what is the expected total power cost for July?