Question 2 You are an intern in the accounts department of Clari-Mak. Your head of department would like to understand the relationship between production runs and maintenance costs. Below is a time series of costs and activity levels. Days Maintenance expense Number of production (GHS) runs Monday 5350 12 Tuesday 7500 16 Wednesday 5200 13 Thursday 6890 15 Friday 7850 14 Saturday 5570 18 Required: (i) Determine a cost formula for maintenance expense using the high-low method. [8 marks] (ii) Estimate the maintenance expense for a month in which production runs are 25. [2 marks] (iii) Suppose you run a regression of a firm's total cost on its activity level and obtained the following regression equation: y = 650,000+ 0.75x Required: a) What will be the firm's total fixed when level of activity is 250,000 units? [2 marks] b) What will be the firm's total variable cost when level of activity is 250,000 units? [2 marks] 2