George Automobile Accessories Ltd produces automobile spare parts for motor vehicles. Factory overheads incurred in the previous three months were as follows.

	Units of production	Factory overhead
April 2020	6,000	30,000
May 2020	5,000	20,000
June 2020	4,000	25,000

The management of the company expected to produce 7,000 units for the quarter JulySeptember 2020. Judy, the management accountant of the company, is preparing the labour cost budget for the quarter July-September 2020.

Payroll information for the last four quarters was as follows.

Quarter	Hours worked	Labour cost
July - September 2019	15,000	400,000
October - December 2019	20,000	480,000
January - March 2020	18,000	440,000
April - June 2020	21,000	500,000

Labour cost is assumed to increase by 10%. The company expected to work 23,000 labour hours in the quarter July September 2020.

George Automobile Accessories Ltd also produces a type of high grade lubricant oil for engines of motor vehicles with activity levels and production costs as follows.

Batch Number of bottles Costs ()

1. 4,100 66,000
2. 3,600 53,000
3. 3,200 52,100
4. 2,860 48,230
5. 1,950 36,750
6. 1,020 33,000
7. 580 17,000

Required

1. Calculate the expected total factory overhead and the budgeted labour cost for the quarter July September 2020 by using High-Low method.

2. Calculate the total production cost, of the lubricant oil at activity levels of 6,000 and 12,000 bottles by using Least Square method.
3. Advise the management of George Automobile Accessories Ltd on two advantages and three disadvantages for using high low method in preparing its budget.