Kamloops Laboratory Services (KLS) Inc. performs a variety of test for local private and public health organizations. The lab has incurred the following costs over the past year:

Month	Number of test	Costs
January	3,050	$61,000
February	4,500	74,500
March	7,100	95,600
April	7,000	99,000
May	4,700	74,800
June	5,900	89,000
July	6,000	91,000
August	6,100	90,000
September	5,300	87,000
October	4,900	76,200
November	4,800	78,100
December	5,050	80,700

Required:

1. Using the high-low method, write a cost formula to express the cost behaviour of KLSs production costs.

2. If KLSs believes that it will perform 7,500 tests next month, what is the predicted costs that the company will incur using the high-low method?

3. Briefly comment on the adequacy of the high-low method in determining cost behaviour.