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Rudi P is a caterer who prepares banquets and parties for individual and business functions. He is required to submit estimates to his customers. While he is confident about his estimated costs for food, beverages, and labour costs, he is not certain of his overhead estimate. He has collected actual data for the past 12 months and it is provided below:

	Labour hours	Overhead costs $
January	2,500	55,000
February	2,700	59,000
March	3,000	60,000
April	4,200	64,000
May	4,500	67,000
June	5,500	71,000
July	6,500	74,000
August	7,500	75,000
September	7,000	77,000
October	4,500	68,000
November	3,100	62,000
December	6,500	73,000
	57,500	805,000

a. Use the High-Low method to calculate the:

i. variable overhead cost per labour hour [4 marks]

ii. total fixed overhead cost [3 marks]

b. State the cost function [1 mark]

c. Use the Least-Squares (Regression) method to calculate the:

i. variable overhead cost per labour hour [20 marks]

ii. total fixed overhead cost [4 marks]

d. State the cost function [1 mark]

e. What would be the overhead cost in a month in which 4,950 labour hours were worked using:

i. The high-low cost function and [2.5 marks]

ii. The regression cost function [2.5 marks]

f. Explain which of the above costs you would consider to be more reliable. [4 marks]