Question:
Tijuana Tile has gathered the following information on its utility costs for the past six months.
Machine Hours Utility Cost
1,300 ..................$ 940
1,700 ..................1,075
1,250 ................... 900
1,800 ..................1,132
1,900 ..................1,160
1,500 .................. 990
a. Using the high-low method, determine the cost formula for utility costs.
b. Prepare a flexible budget with separate variable and fixed categories for utility costs at 1,325, 1,500, and 1,675 machine hours.