Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,… 1 answer below »

 
   

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a) Use the high-low method to estimate the cost behaviour for the complex’s electricity costs,
assuming that the variable costs vary in proportion to the hours of operation. Express the total
cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of
operation? (5 marks)
b) During July, the complex will open for 570 hours. Predict the complex’s total electricity costs for
July using the cost estimation method employed in above requirement a). (3marks)
c) What is the main drawback of the high-low method of cost estimation? (2 marks, maximum 150
words)