The Ramon Company is a manufacturer that is interested in developing a cost formula to estimate the fixed and variable components of its monthly manufacturing overhead costs. The company wishes to use machine-hours as its measure of activity and has gathered the data below for this year and last year:

The company leases all of its manufacturing equipment. The lease arrangement calls for a flat monthly fee up to 18,500 machine-hours. If the machine-hours used exceeds 18,500, then the fee becomes strictly variable with respect to the total number of machine-hours consumed during the month. Lease expense is a major element of overhead cost.

	Last Year				This Year
Month	Machine- Hours	Overhead Costs			Machine- Hours	Overhead Costs
January	22,100	$	89,500		22,100	$	91,500
February	26,000	$	110,000		25,000	$	104,000
March	23,000	$	90,600		24,000	$	94,100
April	24,000	$	91,100		23,000	$	88,100
May	21,500	$	82,600		18,775	$	81,100
June	18,000	$	81,000		17,000	$	82,000
July	15,100	$	76,000		13,100	$	73,000
August	10,000	$	70,000		14,100	$	76,500
September	15,000	$	74,500		16,100	$	79,000
October	18,100	$	80,500		18,100	$	78,000
November	17,100	$	77,000		16,100	$	76,500
December	17,500	$	83,500		17,000	$	80,500

1. Assume that the company consumes 23,600 machine-hours during a month. Using the high-low method, estimate the total overhead cost that would be incurred at this level of activity. Be sure to consider only the data points contained in the relevant range of activity when performing your computations. (Do not round intermediate calculations.)