Canco Company is a very reputable in producing paddle boards for the last ten years. A manager of the production department collected the following information for the last six months:

Months	Machine Hours	Operating Costs
July	8,000	$61,000
August	9,200	66,000
September	7,600	60,000
October	8,800	64,000
November	9,000	65,000
December	7,900	61,500

Required:

1. Determine the estimating cost function with machine-hours as the cost driver using the high-low method. (10 marks)

2. If Decembers estimated machine-hours total 9,350, what is the estimated cost of the Production Department? (5 marks)

3. What is the purpose of the high-low method? Explain briefly. (5 marks)

4. Would you use this method in your business? Describe a situation when you would apply this method. (5 marks)