The following information is available for a company:

Year 1

Year 2

Year 3

Year 4

Year 1 Year 2 Year 3 Year 4 Sales/production (units)

134,400 142,600 151,200 150,200 Total costs () 270,800 288,944 312,980 318,700 Cost inflation index 100 107 115 120

	Year 1	Year 2	Year 3	Year 4
Sales/production (units)	134,400	142,600	151,200	150,200
Total costs ()	270,800	288,944	312,980	318,700
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.)

Total cost equation (at year 1 price): TC =

X=

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.)

In year 2, actual costs (at year 1 prices) were	%		Predictions
In year 4, actual cost (at year 1 prices) were	%		Predictions