Harrison, Inc. is preparing their budget for the upcoming year and requires a breakdown of...
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Accounting
Harrison, Inc. is preparing their budget for the upcoming year and requires a breakdown of the costs of power used in its factory into the fixed and variable components. They have determined the number of direct labor hours worked affects the cost of power. The following data on the cost of power used and direct labor hours worked are available for the last six months of this year:
Month Cost of Power Direct Labor Hours
July $ 14,850 3,000
August 15,400 2,050
September 16,370 2,900
October 19,800 3,650
November 17,600 2,670
December 18,500 2,650
1. Assuming that Harrison uses the high-low method of analysis, calculate the cost function to be used to estimate the power costs.
2. They have determined that production needs will require 8,467 direct labor hours. Using the cost function calculated above, what is the estimated cost of power
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