Please make sure to show clear step by working out for all questions especially (A).

Question:

Rudi P is a caterer who prepares banquets and parties for individual and business functions. He is required to submit estimates to his customers. While he is confident about his estimated costs for food, beverages, and labour costs, he is not certain of his overhead estimate. He has collected actual data for the past 12 months and it is provided below:

Labour hours

Overhead costs $

January

2,500

55,000

February

2,700

59,000

March

3,000

60,000

April

4,200

64,000

May

4,500

67,000

June

5,500

71,000

July

6,500

74,000

August

7,500

75,000

September

7,000

77,000

October

4,500

68,000

November

3,100

62,000

December

6,500

73,000

57,500

805,000

A. Use the Least-Squares (Regression) method to calculate the:

i. variable overhead cost per labour hour [20 marks]

ii. total fixed overhead cost [4 marks]

B. State the cost function [1 mark]

C. What would be the overhead cost in a month in which 4,950 labour hours were worked using:

i. The high-low cost function and [2.5 marks]

ii. The regression cost function [2.5 marks]