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Life Company has had the following experience over the past five quarters:

Life Company has had the following experience over the past five quarters:

Units produced Electricity cost ($)
27,000 101,000
32,000 120,000
31,000 116,000
20,000 84,000
22,000 90,000

a) Using the high-low method, determine an equation for electricity cost (Y) as a function of units produced (X). Assume a linear function.

b) Using your equation, forecast electricity cost at a volume of 25,000 units produced.

SOLUTION