Exercise 6-25 Estimating Cost Behavior; High-Low Method (LO 6-1, 6-2, 6-5) Jonathan Macintosh is a highly successful Pen

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Exercise 6-25 Estimating Cost Behavior; High-Low Method (LO 6-1,
6-2, 6-5) Jonathan Macintosh is a highly successful Pennsylvania
orchardman who has formed his own company to produce and package
applesauce. Apples can be stored for several months in cold
storage, so applesauce production is relatively uniform throughout
the year. The recently hired controller for the firm is about to
apply the high-low method in estimating the company’s energy cost
behavior. The following costs were incurred during the past 12
months: Month Pints of Applesauce Produced Energy Cost January
106,000 $ 70,300 February 64,000 64,000 March 67,000 66,200 April
73,000 67,500 May 91,000 68,800 June 97,000 70,100 July 121,000
70,000 August 91,000 68,500 September 91,000 69,100 October 85,000
68,200 November 124,000 72,400 December 118,000 71,250 Required: 1.
Use the high-low method to estimate the company’s energy cost
behavior and express it in equation form. Use the formula Y = a +
bX, where Y denotes energy cost for a month and X denotes pints of
applesauce produced. 2. Predict the energy cost for a month in
which 75,000 pints of applesauce are produced.