Charlene has been in the business of servicing computers and computer systems at affordable prices for just over five years. Her company's primary clients are local businesses but include some residential customers. Their advertised approach is to analyze the problem, develop a range of IT options, explain their specific recommendation to the customer, and finally estimate the time and costs associated with the service prior to commencing work.

Their approach has proven successful, but competition is getting much stiffer, and Charlene is concerned that her approach to determining costs for any particular job is not correctly incorporating all of the company's indirect costs. She asks her accountant to create an allocation system for assigning indirect costs to jobs.

Her accountant decided to implement a single-driver allocation system and needed to develop a reliable cost function to estimate total indirect costs (the numerator of the single driver allocation rate). The accountant plans to use service hours as the cost driver in the allocation process and as the activity measure in the cost function.

She estimated the parameters of the indirect cost function by analyzing the behavior of last month's indirect costs, when the company spent 289 service hours repairing 43 computer systems. Here are the results of her analysis:

Cost Item	Fixed Cost	Variable Cost
Utilities	$213	$129
Office rent	3,241	0
Administration	3,057	216
Supplies	0	3,355
Training	350	331
Total	$6,861	$4,031

After giving it some more thought, the accountant was somewhat concerned that last month may not have been a typical month, so she created a different set of cost function parameters using the high-low method. She collected total cost and activity data from the last six months; the following were for the two months when total indirect costs and activity were at the lowest and the highest levels:

	low month	high month
Total indirect costs	$8,427	$11,085
Service hours	239	574
Computer systems serviced	30	74

Next month, Charlene expects the company to spend 420 hours solving 51 clients' computer system problems.

REQUIRED [ROUND ALL PER-UNIT COSTS TO TWO DECIMAL PLACES.] Part A [5 tries; 5 points] If the accountant uses the cost function based on her analysis of last month's costs, what is her estimate of total indirect costs next month?

Part B [5 tries; 5 points] If the accountant uses the cost function based on the high-low method, what is her estimate of total indirect costs next month?