Tripton Ltd operates a package holiday company in Cardiff. The company has a reliable budgeting process from which the following information has been obtained:

May June July
Sales of holidays (units) 500 800 1000
Costs: £ £ £
Staff Salaries 196,000 196,000 196,000
Food 7,500 12,000 15,000
Administration costs 40,000 40,000 40,000
Repairs and maintenance 40,000 64,000 80,000
Depreciation on office equipment 20,000 20,000 20,000
Hotel costs 75,000 102,000 120,000
Office rent 28,000 28,000 28,000
Agents’ commission 27,000 42,000 52,000

(a)  Using the high-low method, calculate the linear cost equation in the form Y = a+bx for each semi-variable cost included in the budget above.

(10 marks)

(b)  Using the linear cost equations, where appropriate, prepare the total budget for the month of August. The company is expecting to make sales of 1,400 holidays.

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