During the first two years of operations, Memories, Inc.'s overhead costs have fluctuated from month to month. Although overhead appears to go up and down according to the number of figurines produced each month, the accounting manager has noticed that this is not always the case. For example, in the fourteenth month of operations, the manufacturing facility was closed for almost 10 days because of severe weather and production for that month was very low. However, overhead costs were only reduced by 25% from the prior month.

In an effort to estimate overhead costs for Year 3, George has collected the following information for the past 24 months of operation and has asked for your assistance in analyzing the data.

Month	Figurines Produced	Total Overhead Costs
1	25,784	$17,200
2	25,897	$17,300
3	25,750	$17,450
4	26,352	$17,600
5	27,567	$17,950
6	28,492	$18,125
7	27,398	$17,900
8	28,112	$17,955
9	29,499	$18,507
10	28,879	$18,295
11	29,344	$18,325
12	29,399	$18,550
13	30,879	$19,825
14	15,167	$14,800
15	28,379	$18,732
16	29,765	$19,832
17	30,334	$19,965
18	30,761	$19,786
19	31,300	$20,359
20	31,804	$20,149
21	31,795	$20,508
22	32,016	$20,489
23	32,379	$21,166
24	32,675	$20,852

Required:

Analyze the data, with and without month 14, using the high-low method. Estimate both the fixed costs and variable cost per unit and create the cost equation with and without month 14. Does the data from the 14th month impact the accuracy of the cost equation?

Should the accounting manager consider using a different independent variable instead of number of figurines? What would you suggest?

For Year 3, MI estimates January production of 33,000 figurines. Based on that expected production, how much overhead would you estimate MI will incur in January. (Use High-Low method without month 14 data) Explain your answer.