Pioneer Company (K) Ltd, a Kenyan company involved in the packaging industry, is preparing its budget for the year to 30^th June, 20X9. In respect of fuel oil consumption, it is desired to estimate an equation of the form y = a + bx where y is the total expense at an activity level x, a is the fixed expense and b is the rate of variable cost.

The following data relates to the year ending 30^th June, 20X8.

Month	Machine hours (000)	Fuel oil expense (shs 000)	Month	Machine hours (000)	Fuel oil expense (shs 000)
January	26	500	July	34	640
February	26	500	August	30	620
March	31	530	September	34	620
April	35	550	October	39	590
May	43	580	November	42	500
June	48	680	December	32	530

The annual total and monthly average figures for the year ending 30^th June, 20X8 were as follows:

	Machine hours (000)	Fuel oil expense (shs 000)
Annual total	420	6,840
Monthly average	35	570

You are required to:

1. Estimate fixed and variable elements of fuel oil expense from the above data by both the following methods:

1. High and low points (5 marks)
2. Least-squares regression analysis (11 marks)