Spark Electrical Company manufactures electrical components. Plant management has experienced difficulties with fluctuating monthly overhead costs. Management wants to be able to estimate overhead costs to plan its operations and financial needs. A trade association publication reports that for companies manufacturing electrical components, overhead tends to vary with machine hours.
Monthly data was gathered on machine hours and overhead costs for the past two years. There were no major changes in operations over this period of time. The raw data is:

The data was entered into Excel and a regression was run on the data. The following output was obtained:
R-square........................................0.91
Coefficients of the equation:
Intercept....................................39,859
Independent variable (slope)................2.15
Required:
a. Use the high-low method to estimate the overhead costs.
b. Are the regression analysis results acceptable?
c. Use the results of both the high-low method and the regression to prepare the cost estimation equation and to prepare a cost estimate for 22,000 machine hours.

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Month Number Machine Hours Overhead Costs (S) 20,000 25,000 22,000 84,000 99,000 89,500 2 3 23,000 20,000 19,000 14,000 10,000 12,000 90,000 81,500 75,500 4 70,500 64,500 69,000 10 17,000 16,000 19,000 21,000 24,000 75,000 71,500 78,000 11 12 13 86,000 93,000 14 23,000 22,000 93,000 87,000 15 16 20,000 18,000 12,000 13,000 80,000 76,500 67,500 71,000 73,500 72,500 17 18 19 20 15,000 17,000 21 22 71,000 75,000 23 15,000 18,000 24