Question 1 (7 marks)

a) You overheard two accounting students' conversation: "Why are there so many cost categories in management accounting? What is the point of classifying costs?"

b) Best Juice is a healthy juice franchise chain located in several stores in NSW, Australia. The hours of operation and electricity costs for one of the company's new stores which opened in the past 6 months were as follows:

Month	Total hours of operation	Total electricity cost
July	600	$3 400
August	700	$3 800
September	500	$3 200
October	550	$3 240
November	450	$2 700
December	400	$2 600

Required:

i) Using the high-low method, determine the cost formula that expresses the cost behaviour of the company's electricity costs.

ii) Can the High-Low method be relied upon in an unstable business environment? Explain.