QUESTION 3 21 MARKS Beetroots (Pty) Ltd is a company that buysfresh veggies in bulk, and sells it direct to the public afterpackaging it in smaller quantities. The following cost data isavailable for six months: Month Kg Veggies Total cost January 200kgR3,800 February 500kg R8,600 March 900kg R14,300 April 350kg R5,950May 780kg R12,800 June 800kg R13,200 The Financial Manager is ofthe opinion that the total cost for the month is related to thequantity of veggies that is packaged (measured in kilograms).REQUIRED: MARKS 3.1 Compile a cost formula (cost function) bymaking use of the High-Lowmethod. 5 3.2 Compile a cost formula(cost function) by making use of the Least Squares-method (SimpleRegression Analysis). Show all calculations. 8 3.3 Explain whythere is a difference between the cost formula according to theHigh-Low-method and the cost formula according to the LeastSquares-method, and advise the best method to use. 4 3.4 Calculatethe budgeted cost for July and August according to both costformulas if the expected quantity of veggies that will be packagedis 950kg and 1,020kg respectively. 4
