The following information is available for a company:

	Year 1		Year 2		Year 3		Year 4
Sales/production (units)	134,400		142,600		151,200		150,200
Total costs ()	272,800		290,944		314,980		320,700
Cost inflation index	100		107		115		120

Required:
1.	Determine a linear function for total costs per annum (at Year 1 prices) from the above data, using the high-low method. (Do not round variable cost element in the intermediate calculations. Round the first coefficient to 3 decimal places and the second coefficient the to nearest whole number.)

2.	Using the function from requirement 1 and the data above, evaluate the accuracy of the function as a predictor of costs. (Round your answers to 2 decimal places. Enter your answers as a positive values. Do not round variable cost element in intermediate calculations. Round your other intermediate calculations to nearest whole pound.)
	Is the cost equation (adjusted for inflation) an accurate predictor of costs under existing operating conditions?
	multiple choice Yes No

3.	Using the function from requirement 1, forecast the total costs in Year 5 based on a volume of 154,400 units and a cost inflation index for Year 5 is 125.8. (Do not round variable cost element in intermediate calculations. Round your answer to the nearest whole pound.)

4.	Selling prices in Year 5 are expected to be 15% higher than those in Year 1, when total sales revenue was 319,872. Draw a profit-volume chart for Year 5, showing sales up to 180,000 units per annum. (Do not round your intermediate calculations. Round your answers to the nearest whole pound.)