(b) Eastern Ltd. is preparing its budget for the year ending 30 June 2020. For the fuel expenses consumption it is decided to estimate an equation of the form, y = a + bx, where y is the total expense at an activity level x, a is the fixed expense and b is the rate of variable cost. The following information relate to the year ended 30 June 2019: Month Machine Fuel Oil Month Machine hours expense hours 2019 (Sh. '000') (Sh. '000') 2020 (Sh. '000') July 34 640 January 26 August 30 620 February 26 September 34 620 March 31 October 39 590 April 35 November 42 500 May 43 December 32 530 June 48 Fuel oil expense (Sh. '000') 500 500 530 550 580 680 The annual total and monthly average figures for the year ended 30 June 2019 were as follows: Machine hours Fuel oil expense ('000') (Sh. '000') 420 6,840 35 570 Annual total Monthly average Required: (0) Using the high-low method, estimate and interpret the fixed and variable cost elements of the fuel oil expense. (6 marks) (ii) Using the results in (i) above, predict the fuel oil expense for November 2020 if experience indicates that 41,000 machine hours will be used. (3 marks) (iii) Briefly explain any two limitations of High-low method of cost estimation that may be overcome by using simple linear regression analysis. (5 marks) (Total: 20 marks)