Oki Products, LTD., has observed the following processing costs at various levels of activity over last 15 months:
|
Month
|
Units Produced
|
Processing Cost
|
|
1
|
4,500
|
$38,000
|
|
2
|
11,000
|
$52,000
|
|
3
|
12,000
|
$56,000
|
|
4
|
5,500
|
$40,000
|
|
5
|
9,000
|
$47,000
|
|
6
|
10,500
|
$52,000
|
|
7
|
7,500
|
$44,000
|
|
8
|
5,000
|
$41,000
|
|
9
|
11,500
|
$52,000
|
|
10
|
6,000
|
$43,000
|
|
11
|
8,500
|
$48,000
|
|
12
|
10,000
|
$50,000
|
|
13
|
6,500
|
$44,000
|
|
14
|
9,500
|
$48,000
|
|
15
|
8,000
|
$46,000
|
Use the company's historical data for months 1 to 15 and
(i) Find the High-Low equation for this company, and then
(ii) Use the High-Low equation to predict the processing cost for month 20 when the company plans to produce 7,000 units, and also
(iii) use the High-Low equation to predict the processing cost for month 21 when the company plans to produce 10,300 units.