Cost Behavior Analysis; Utility of Cost Behavior Information. Lawson Incorporated assigns factory over¬ head by a predetermined rate on the basis of direct labor hours. Factory overhead costs for two recent years, adjusted for changes using current prices and wage rates, are as follows:  LO6 Year 1 Year 2 Direct labor hours worked.
2,760,000 2,160,000 Factory overhead costs:
Indirectlabor.
$11,040,000 $ 8,640,000 Employee benefits.
4,140,000 3,240,000 Supplies.
2,760,000 2,160,000 Power.
2,208,000 1,728,000 Heat and light.
552,000 552,000 Supervision.
2,865,000 2,625,000 Depreciation.
7,930,000 7,930,000 Property taxes and insurance.
3,005,000 3,005,000 Total factory overhead cost.
.. $34,500,000 $29,880,000 Required:
(1) The company expects to operate at a level of activ¬ ity of 2,300,000 direct labor hours next year. Using the data from the two recent years, calculate the estimated total factory overhead for next year.
(2) Explain how the company can use the computed cost behavior information for:

(a) Evaluation of product pricing decisions

(b) Cost control evaluation

(c) Development of budgets