I’m getting a slightly different answer from the P1 pearson mock on this question, wonder if someone could please explain the workings.
Many Thanks James
The overhead costs of a company can be estimated using the formula: y = $20,000 + $0.50x where y is the monthly cost and x represents the monthly activity level measured in units.
Monthly activity levels in units may be estimated using a time series model: a = 50,000 + 20b where ‘a’ represents the monthly activity level and ‘b’ represents the month number.
In month 300, when the seasonal index value is 105, what is the overhead cost expected to be?