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QUESTION 3 (37 marks) Label (Pty) Ltd is a local clothing manufacturer that manufactures T-shirts according to the specific designs or prints required by their
QUESTION 3 (37 marks) Label (Pty) Ltd is a local clothing manufacturer that manufactures T-shirts according to the specific designs or prints required by their customers. In order to tailor-make the T-shirts, Label (Pty) Ltd's designers spend a lot of time on the phone discussing the details with their customers. During the six months ended 31 December 2022, the following information was obtained: Additional information: It is estimated that in January 2023, the total number of units (tailor-made T-shirts) manufactured will be 115 . REQUIRED: Calculate the total budgeted semi-variable telephone costs if 115T-shirts are manufactured in January 2023 using the following methods: 3.1 The high-low method. Use the high output level to calculate the fixed cost component. (11 marks) 3.2 The least squares method (regression analysis). Use the following formulae when using this method: xy=ax+bx2y=na+bx Where: y= the dependent variable (cost) a= the intercept on the y-axis i.e. the fixed cost b= the variable cost per unit and the slope of the line x= the independent variable (activity level) n= the number of observations Round to two decimal places. Show all workings. (24 marks) 3.3 Describe the difference between product cost and period costs. (2 marks) Competency Framework Reference
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