managerial accounting 410389

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 35,000 $ 23,400 February 21,000 22,100 March 22,000 22,000 April 24,000 22,450 May 30,000 22,900 June 32,000 23,350 July 40,000 28,000 August 30,000 22,800 September 30,000 23,000 October 28,000 22,700 November 41,000 24,100 December 39,000 24,950 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. Total energy cost = $ + $ X 2. Predict the energy cost for a month in which 26,000 pints of applesauce are produced Energy cost $