Reference no: EM132585633

XYZ Company uses the formula y = a + bX to predict and analyze overhead costs. In the previous year, XYZ used $1,750 per month for the a factor and $0.35 for the b factor in applying overhead. XYZ has used direct labour hours in the past, but is wondering whether overhead behaviour is more closely associated with machine hours.

The following data have been generated for consideration:

Month               Machine Hours              Overhead Costs

1                           474                           $2,720

2                           471                               $3,015

3                           399                                $2,458

4                            487                                $2,947

5                             511                                 $2,764

6                              418                              $2,597

Question 1: If it is expected that the company will incur 977 machine hours in the coming month, predict that month's overhead costs. (Round answer to 0 decimal places, e.g. 525).