1. The financial information for Cub Company is shown below:

Prime costs $195,000

Conversion costs 221,000

Direct materials used 85,000

What is the amount for direct labour?

2.

Andrew, marketing clerk for Shine Agency, recorded the following information for last year:

Month	Number of Customers	Customer Service Costs
January	356	$	527,233
February	417		544,335
March	338		482,655
April	526		668,050
May	400		530,500
June	457		656,910
July	366		543,770
August	495		680,400
September	345		487,230
October	531		712,325
November	443		629,030
December	415		542,000

He would like to be able to estimate customer service costs using the number of customers as the basis for estimation. However, because he has never taken a course in managerial accounting, he does not know how to set up a cost equation. He has therefore approached you for help.

Required:

1. Set up a cost equation for monthly customer service costs using the highlow method.

2. Using the equation from Part (1), compute the estimated customer service costs if the number of customers is expected to be 700.

3. You also used the least-squares regression method to do the analysis of the costs; the analysis resulted in the following output:

Intercept:	107,491.97
Coefficient of X-variable:	1,122.92
Adjusted R square:	0.90

Set up a cost equation using the above numbers. (Round the "Fixed cost" to the nearest dollar amount and "Variable cost" to 2 decimal places).