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Question - X Company's accountant collected the following actual total cost and activity information from the past two months to help her develop an overhead cost function that she could use to predict overhead costs in July, when production is expected to be 10,700 units:
Month
Overhead Cost
Units produced
May
$27,520
7,400
June
$31,200
9,000
Assume the accountant used the account analysis method with data from May to develop the cost function. She collected the following additional May information: supply cost was $11,870, all variable; maintenance cost was $5,500, 70% variable; and rent was $10,150, all fixed. Using the resulting cost function, what would be the estimate of total overhead costs in July?
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