Question 1 - 25 marks (You are advised to spend no longer than 20 minutes) Part A a. "Determining how cost will change with output is of vital importance for decision-making, planning and control. The preparation of budgets, the production of performance reports, the calculation of standard costs and the provision of relevant costs for pricing and other decisions all depend on reliable estimates of costs. Unfortunately, costs are not easy to predict, since they behave differently under different circumstances." Your manager needs your help to describe briefly the differences between high-low method and scattergraph method in relation to the task of estimating fixed and variable elements of a mixed cost. Upon discussion with him, you are also required to discuss the limitations and circumstances in which you would recommend their use. (6 marks) b. Assuming that the coefficient of determination is approximately 0.8521, interpret the significance of this fact. (4 marks)