Confyt Limited wants to find an equation to estimate some of their monthly operating costs for the coming year. The following cost and other data were gathered for the previous 12 months:

ACCT5016 Management Accounting M

Month

January February March April May June July August September October November December

Required:

Moulding Mould set- Delivery cost ups cost$14,600 168 $61,552 $14,552 120 $69,328 $14,550 235 $67,346 $14,680 315 $56,116 $15,266 510 $52,588 $14,866 288 $76,564 $14,915 345 $72,856 $14,160 365 $70,588 $15,220 420 $60,220 $15,150 485 $61,732 $15,171 495 $50,248 $14,480 275 $79,192

Units Electricity shipped cost

14,320 $11,552 16,480 $19,328 15,930 $17,346 12,810 $6,116 11,830 $2,588 20,490 $26,564 17,460 $22,856 16,830 $20,588 13,950 $10,220 14,370 $11,732 11,180 $10,248 19,400 $29,192

Machine hours14,320 16,480 15,930 7,810 1,830 19,490 17,460 16,830 13,950 14,370 11,180 19,220

a.Using the high-low method, determine the cost function for Moulding cost. (6 marks)

b.Using your answer in (a), explain how High-Low method is beneficial in managerial decisions. (4 marks)