Question $5$

An entity has a market$-$based pricing structure that is based on the quantity demanded. The

entity's policy is to keep total cost of the product at $80\%$ of market price at all times. The

entity uses the traditional costing system to establish cost. The budgeted overheads for the

period were estimated at $$10,000,000.$ Meanwhile, the budgeted activity level is expected to

be $500,000$ direct labour hours.

Information regarding total cost of the product at different demand levels are shown below:

Required:

$($a$)$ Determine the straight$-$line demand$/$price equation based on the selling prices and

quantity demanded.