Texpedia provides travel services on the Internet. In the first quarter of 2016, Texpedia reported an operating income of $5.3 million on sales revenue of $62 million. In the second quarter of 2016, sales revenue had increased to $68 million, and Texpedia had an operating income of $9.2 million. Assume that Texpedias costs had followed the same linear cost function, Total costs = Fixed costs + (Variable costs per Revenue $ x Total Revenue) in both quarters and that Texpedia was operating within the relevant range of this cost function.

1. Estimate Texpedias cost function using the data provided

2. Use the cost function you estimated to forecast Texpedias third quarter 2016 costs and operating income based on a sales revenue prediction of $70 million.