Daraz.pk is a fast growing e-commerce business in Pakistan. Daraz delivers the product ordered on its website to the customer's doorstep. The management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. The relevant range is 1000 to 6000 miles. If the number of miles traveled increases from 6000, then the variable cost per unit would remain constant whereas fixed cost would increase by 10%. Following is the information:

Month MilesShipping Cost

January4,200 $48,000

February1,500 24,000

March 1,100 16,000

April 2,900 35,000

May 5,100 52,000

June 2,200 32,000

Required:

a)Estimate the proportion of variable and fixed cost through OLS Method

b)Calculate the mixed cost equation

c)What Shipping cost would you expect to be incurred at an activity level of 7000 Miles?