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QUESTION THREE High-tex Engineering Company Limited wishes to set flexible budgets for each of...

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Accounting

QUESTION THREE
High-tex Engineering Company Limited wishes to set flexible budgets for each of its operating departments. A separate maintenance department performs all routine and major repair works on the company's equipment and facilities. The company has determined that maintenance department performs all routine and major repair works on the company's equipment and facilities. The company has determined that maintenance cost is primarily a function of machine hours worked in the various production departments.
The maintenance cost incurred and the actual machine hours worked during the months of January, February, March and April 2003 were as follows:
January : Machine Hours in production depatment : 800
Maintenance departments costs : 350usd
February : Machine Hours in production depatment :1200
Maintenance departments costs : 350usd
March/ Machine Hours in production depatment : 400
Maintenance departments costs : 150usd
April : Machine Hours in production depatment : 1600
Maintenance departments costs : 550usd
Required: Determine the cost estimation function using:
1) High-low method (5 marks).
2) Regression analysis (5 marks)

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