Coronavirus disease (COVID-19) caused by a new virus results in respiratory illness (like the flu). The disease was first identified in December 2019 and has since spread globally, resulting in the coronavirus pandemic of 2020. The cost of health care in such a situation is very high and companies need to be mindful of cost estimates. Humble Group Ltd manufactures testing kits for Corona infection. The production and cost data for early 2020 as recorded over the last two months as:

Required

1. Calculate the fixed and variable costs
2. Estimate the total costs for March if the ONS expects the inflation rate to fall to 5% and the production output is estimated to increase to 62,000 test kits.
3. What are some precautions to be taken when predicting costs?

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Period Production (test kits) Total costs ($) January 48,000 1,800,000 February 60,000 2,000,000