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Question 2 Lotus company incurred the following maintenance costs during the past 9 months : Table 1 Months 1 2 3 4 5 6 7

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Question 2 Lotus company incurred the following maintenance costs during the past 9 months : Table 1 Months 1 2 3 4 5 6 7 8 9 Room occupancy 120 210 60 160 430 80 325 145 570 Costs 5560 10780 2220 9280 20320 4920 18140 7500 22100 REQUIRED Part 1 A. Use the data on Table 1, estimate the variable and fixed cost of the company using the high and low method B. Develop a cost function for the company. C. Estimate the maintenance cost if 680 rooms are occupied in October Part 2 1. Use a scatter graph and the two points that seem to best represent the relationship between cost and activity levels of 80 and 325 machine hours. Use these two points, estimate the variable cost and the fixed cost components of maintenance costs] 2. Develop a cost function that the company can use to estimate maintenance cost at different volume levels of occupancy 3. Estimate maintenance costs for December if the company expects 600 rooms to be occupied SHOULD CONSTRUCT THE GRAPH USING GRAPH PAPER [available free on internet]. Very little mark will be given if you make a sketch

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