1. The following information is available for maintanence costs for the first six months of the year.

Month	Production Volume	Maintanence Cost
January	10,000	$77,000
February	12,000	85,500
March	11,500	84,700
April	13,000	88,600
May	16,000	98,300
June	17,500	101,700
July	18,200	104,600
August	17,600	102,900
September	15,400	97,100
November	12,800	88,650
December	9,500	78,500

1. Compute the fixed and variable components of maintanence costs using the high-low method. What is the cost formula for maintanence costs? Estimate the maintenance costs if expected production for the next month is 15,000 units. (15 points)

2. The following computer printout was generated using the least squares method on the maintanence cost data given above:

Intercept 48,034.62

Slope 3.12

Activity Variable Units of Production Volume

Using the information from the computer printout, develop a cost function that can be used to estimate maintenance costs at different volume levels and estimate the maintenance costs if expected production for the next month is 15,000 units.