Case Study Material: Speedy Copy Centre operates a chain of photocopy centres near several major universities. The firm's accountant is accumulating data to be used in preparing its annual budget for the coming year. The cost behaviour pattern of the firm's equipment maintenance costs must be determined. Data regarding number of photocopies, maintenance hours and cost for last year are as follows: Month Number of Hours of Maintenance photocopies maintenance costs service January 80,000 525 $4,710 February 68,000 505 4,310 March 69,000 310 2,990 April 64,000 495 4,200 May 90,000 315 3,000 June 85,000 485 4,215 July 55,000 315 2,950 August 85,000 405 3,680 September 62,000 475 4,100 October 82,000 345 3,250 November 60,000 350 3,260 December 70,000 335 3,015 Total 870,000 4860 $43,680 Average 72,500 405 $3,640 Source: Adapted from Langfield-Smith, K., Thorne, H., and Hilton, R.W. (2012). Management accounting: Information for managing and creating value (6th ed.) (pp. 121-122). Macquarie Park: McGraw Hill Australia Pty Ltd. Questions: 1. Compute the total variable cost and total fixed cost at an activity level of 85,000 photocopies. (Hint: Use the high-low method). 2 Explain the role cost drives play in identifying cost behaviour patterns, using the Speedy Copy Centre's information above. 3. Explain the following statement: "Outside of the relevant range, cost behaviour patterns may not hold." 4. Explain the relationship between the following terms: cost estimation, cost behaviour, and cost prediction