PG Phones accumulated the following production and overhead cost data for the past five months, related to its production of cell phones.

NUMBER OF CELL PHONES PRODUCED TOTAL OVERHEAD COST

January 13,600 $34,500

February 11,500 29,500

March 12,750 30,100

April 14,300 35,900

May 13,250 32,650

1. Prepare an estimated total cost formula using the high-low method.

2. Using the cost formula that you derived in question 8, calculate the estimated total overhead costs if 13,000 cell phones are produced.

3.

You decide to generate the information for the estimated cost formula by using the regression method and obtain the following data:

INTERCEPT 535.66

X VARIABLE 2.45

Using this information, calculate the estimated total overhead costs if 13,000 cell phones are produced.

4. Explain why your answer to question 3 is more accurate than your answer to question 2.