HA2011 Management Accounting - Assessment Task Tutorial Questions

Question 1 - Week 2 (8b) (7 marks)

Star Limited, a management consultancy firm, has operating hours fluctuate from week to week. Its utilities costs and operating hours for the past six weeks are as follow:

Required:

1. Use the high-low method to estimate the cost behaviour for the company’s utilities costs, assuming that variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y = a + bX).
2. Star Limited is expected to be operated for 45 hours in next week. Predict the company’s total utilities cost for the week