Gilly Ltd. has the following total factory overhead computed at both the high and low levels of activity for a given month of operation:

Levels of activityHighLow

Direct labour hours150,000100,000

Total factory cost(sh.) 352,500284,000

The total factory overhead above consists of indirect materials, repairs and rent expenses.The company has analysed, at the 100,000 direct labour hours of activity level that costs exist in the following proportions: sh.

Indirect materials (variable) 100,000

Repairs 64,000 Rent (fixed) 120,000

284,000

For planning purposes, the company wishes to break the repairs cost into its variable and fixed elements.

You are required to

a. Determine how much of the sh.352,500 total factory overhead costs at the high level of activity above that relates to repairs costs.(5 Marks)

b. Determine by means of the high and low method of cost analysis, the cost function for the repairs cost.