Red Deer Company incurred the following costs and machine hours for the months of March and April:

March

April

Factory Supplies

$3,600

$5,400

Direct labour

24,000

36,000

Utitlies cost

6,600

6,900

Insurance

12,000

12,000

0

0

Machine hours

1200

1800

Required (round to 2 decimal places):

1. Assuming that the driver for all costs is machine hours, determine the cost behavior of each of the four types of costs above.Show calculations. (4 marks)
2. For any mixed costs identified in part a), use the high low method to determine the fixed and variable components of the cost.(3 marks)
3. Construct a cost formula to be used to estimate total monthly costs.(3 marks)
4. If Red Deer Company expects to incur 2,160 machine hours in May, using the high-low method, what would be the estimate of their total costs? (2 marks)