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 ()	272,600		290,744		314,780		320,500
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 prices): 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 cost (at Year 1 prices) were __________% below or above (Choose) In Year 4, actual costs (at Year 1 prices) were __________% below or above (Choose)

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.) Total costs? _______________

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.) Year 5 sales at 90,000 units ?______________ Year 5 costs at 90,000 units?______________ Year 5 Profit at 90,000 units?______________