Building Inspection Services conducts home inspections for prospective home buyers. They have asked for your help in understanding cost behaviour. They provided the following information, gathered from a cross-section of recent inspections.

Required:

1. Using the high-low method, develop a cost formula. 4 marks
2. Comment on the benefits / pitfalls of this method. 2 marks
3. What is the chart on the right? What can we learn from it? 2 marks
4. What is another tool we could use for this job? Is it better? Why? 2 marks

$1.800 $1.600 $1.400 $1.200 $1.000 5800 HOURS 18 10 14 23 15 33 27 COST $1,000 $700 $660 $1,440 $1,000 $1,640 $930 5600 5400 $200 SO 5 10 25 30 35 15 20 Inspection Hours