A. A business is studying its order processing costs behaviour and has gathered the following data for a recent seven months period.

Month Sales Order Y Order Processing Costs X

January 6 000 10,000

February 3 000 7,000

March 8 000 16,250

April 7 200 9,750

May 4 600 8,000

June 2 000 5,000

July 4 000 7,500

i. Determine the variable cost per sales order and the fixed cost using the high low method

B. The following cost and activity data were taken from the factory records:

Cost Activity

$ (units)

28 16

31 20

40 28

36 28

44 36

47 40

i . Using the least squares method of linear regression, calculate the fixed and variable elements of the cost and state the linear cost function.