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Little Red Hood Inc. management has estimated the factory overhead cost as $1090 variable cost and $1430 fixed cost to make 100 units using 500 machine hours.
1. Using the above information, derive the cost equation in the form of Y = a + bx.
2. Predict the cost with 550 machine hours.
3. Compare the above method of cost estimation with engineering approach, with respect to the costs and benefits of the two approaches.
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