Question #3

The Dolphin Company collected the following annual information on total net sales and total operating costs:

Year	Total Net Sales	Total Operating Costs
2014	$45,000,000	$27,400,000
2015	$48,000,000	$28,000,000

In 2016, total net sales are budgeted to be $50,500,000. Using the high-low method, prepare an estimate of total operating costs for 2016, assuming total fixed costs and variable costs as a percentage of total net sales are expected to be the same in 2016 as in 2014 and 2015.