Your company is preparing an estimate of its production costs for the coming period. The controller estimates that direct materials costs are $45 per unit and that direct labor costs are $23 per hour. Estimating overhead, which is applied on the basis of direct labor costs, is difficult. The controller's office estimated overhead costs at $4,000 for fixed costs and $17 per unit for variable costs. Your colleague, Lance, who graduated from a rival school, has already done the analysis and reports the "correct" cost equation as follows: Overhead = $10,511 + $15.94 per unit Lance also reports that the correlation coefficient for the regression is 0.81 and says, "With 81% of the variation in overhead explained by the equation, it certainly should be adopted as the best basis for estimating costs." When asked for the data used to generate the regression, Lance produces the following: Month 1 Overhead $57,064 Unit Production 3,070 2 60,683 3,280 3 77,008 4,210 4 56,624 3,040 5 81,700 3,440 6 72.473 3,950 7 63,904 3,370 8 73,523 4,050 9 77,597 4,160 10 60.068 3,230 11 61,701 3,400 12 73,878 4.120 13 73,513 3,920