Question
Problem 1. High-Low and determination of cost function On November 15, 2009, Sandra Cook, a newly hired cost analyst at Peterson Company, was asked
Problem 1. High-Low and determination of cost function On November 15, 2009, Sandra Cook, a newly hired cost analyst at Peterson Company, was asked to predict overhead costs for the company's operations in 2010, when 530 units are expected to be produced. (Remember that Overhead Costs consist of fixed and variable components.) She collected the following quarterly data: Quarter Production in Units Overhead Costs 1/06 73 $ 715 2/6 76 709 3/06 68 640 4/06 133 1,124 1/07 122 995 2/07 125 1,105 3/07 122 1,113 4/07 130 1,036 1/08 121 982 2/08 126 1,060 3/08 112 990 4/08 81 951 1/09 81 829 2/09 119 1,044 3/09 87 48 985 Using the high-low method to estimate costs, prepare a prediction of overhead costs for 2010. Remember that the data above is quarterly. Please provide a brief explanation of your approach to solving this problem.
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