Yarrawonga Companys management accountant has collected the following information:

Units of Output 30 000 Units 42 000 Units

Direct materials $180 000 $252 000

Workers' wages 1 080 000 1 512 000

Supervisors' salaries 312 000 312 000

Equipment depreciation 151 200 151 200

Maintenance 81 600 110 400

Utilities 384 000 528 000

Total $2 188 800 $2 865 600

Required:

Using the high-low method and the information provided above:

a. Identify the linear cost function equation (5 marks)

b. Estimate the total cost at 36 000 units of output (1 mark)

c. Explain the managers about the potential use of nonlinear curves in cost functions and

cost analysis. Give two examples