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

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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 apple- sauce 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 January February March April May June July August September October November December Pints of Applesauce Produced 35,000 21,000 22,000 24,000 30,000 32,000 40,000 30,000 30,000 28,000 41,000 39,000 Energy Cost $23,400 22,100 22,000 22,450 22,900 23,350 28,000 22,800 23,000 22,700 24,100 24,950 Chapter 6 Activity Analysis, Cost Behavior, and Cost Estimation 267 Required: 1. Use the high-low method to estimate the company's energy cost behavior and express it in equa- tion form. 2. Predict the energy cost for a month in which 26,000 pints of applesauce are produced

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