Problem - Information about Indiana Industrial's utility cost for the last six months of 2010 follows. The high-low method will be used to develop a cost formula to predict 2011utility changes, and the number of machine hours has been found to be an appropriate cost driver. Data for the first half of 2010 are not being considered because the utility company imposed a significant rate change as of July 1, 2010.
Month Machine Hours Utility Cost
July 33,750 $13,000
August 34,000 $12,200
September 33,150 $11,040
October 32,000 $11,960
November 31,250 $11,500
December 31,000 $11,720
a. What is the cost formula for utility expenses?
b. What is the budgeted utility cost for September 2011 if 31,250 machine hours are projected?