This problem has two parts. In Part A, you are asked to do account analysis based on cost and activity information that you are given for one particular past month. In Part B, you are asked to do the high-low method based on cost and activity information for that same month and another past month. Note that for both parts, you are asked to make predictions for a future month. Each part of the problem is worth five points and has two questions. There is no partial credit within a part, so to get the five points for a part, you must answer both questions correctly. You get five tries for each part (not for each individual question). ______________________________________________________

Mears Production Company makes several products and sells them for an average price of $80. Mears' accountant is considering two different approaches to estimating the firm's total monthly cost function, 1) account analysis, and 2) high-low. In both cases, she used units of production as the independent variable.

For the account analysis approach, she developed the cost function by analyzing each cost item in June, when production was 2,000 units. The following are the results of that analysis:

Cost Item	Total Cost	Fixed Cost	Variable Cost
Direct materials	$7,000	$0	$7,000
Direct labor	$10,200	$0	$10,200
Factory overhead	$9,790	$2,990	$6,800
Selling expenses	$6,580	$3,780	$2,800
Administrative expenses	$3,950	$3,950	$0
Total expenses	$37,520	$10,720	$26,800

For the high-low method, she developed the cost function using the data from June above and data from May, when production was 2,500 units and total costs were $45,104.

After developing the two cost functions, the accountant used them to make predictions for the month of October, when production was expected to be 2,200 units.

REQUIRED [ROUND UNIT COSTS TO THE NEAREST CENT AND TOTAL COSTS TO THE NEAREST DOLLAR.]

1. Using the high-low method, what was the accountant's estimate of total fixed costs for October? 7104.0 was incorrect please help