a) A business has semi-variable overhead costs associated with its manufacturing output. It wants to be able to better plan and control its production, and therefore needs determine which of these costs are fixed and which are variable.

Required: Using the information below, use the high-low method to calculate the monthly fixed cost element of the overhead costs. (The fixed costs are the same each month).

Month Units Overhead costs 1 1,520 £42,260 2 2,800 £56,800 3 1,750 £44,750 4 1,600 £41,960 5 2,350 £55,040 6 1,300 £41,600 7 2,100 £50,100 8 2,770 £56,000