Question 2.2
The following data relate to the overhead expenditure of a contractor who undertakes industrial repairs and maintenance for the first six months in 2022
Month Maintenance cost Maintenance hours
Jan 630 7950
Feb 500 7400
Mar 700 8280
April 550 7630
May 780 9100
Jun 800 9800
Where there are more than 1 000 hours incurred in maintenance, it is necessary for the business to employ an additional supervisor at any site at an extra fixed cost of N$ 5 575. REQUIRED:
2.2.1 Using least squares approach determine the cost function for the maintenance cost. Ʃxy = aƩx + bƩx² ……………(i) Ʃy = na + bƩx………………….(ii) Note: You are not obliged to use the simultaneous equation approach. Any other approach is acceptable. 11 2.2.2 Using your answer to 2.2.1 calculate the total cost at 1 200 Maintenance hours. 2 2.2.3 Using the high-low method, determine the cost function for the maintenance cost.