Lucerne Ltd sells feather quilts and has never used CVP analysis in its 4-year history. The manager provides you with the following sales and cost data for the first 4 years of operation:

Year	Costs of manufacturing	Number of quilts
2014 2015 2016 2017	$1 192 000 $1 397 500 $1 618 000 $1 790 000	21 000 23 500 27 000 32 500

Required

A. Using the high-low method, estimate the cost function for the manufacture of quilts by Lucerne Ltd.

B. Check whether the cost function you calculated in requirement A would represent the actual costs of manufacturing for 2015 and 2016. What does this tell you about the high-low method of estimating a cost function?