Acoustic Concepts, Inc. is a manufacturer of speakers. The company is interested in developing a cost formula to estimate the variable and fixed components of its monthly manufacturing overhead costs. The company wishes to use machine- hours as its measure of activity and has gathered the following data for this year and last year: 1 2 3 4 Last Year This Year Month Machine-Hours Overhead Costs Machine-Hours Overhead Costs 6899 8930 6758 4897 7389 8163 6516 4895 3675 9435 8141 3573 200 250 300 320 360 220 180 350 400 260 270 390 4118 4672 5085 6968 7503 4398 3652 7369 8032 4416 4809 8040 330 450 320 290 370 410 310 280 150 500 420 170 12 10 19 20 The company leases all of its manufacturing equipment. The lease arrangement requires a flat monthly fee up to 300 21 machine-hours. If the machine-hours used exceed 300, then the fee becomes strictly variable with respect to the number 22 of excess machine-hours consumed during the month. Lease expense is a major element of overhead cost. 23