InstructionsSend pictures of your written computation.Double rule final answers.Management wants to estimate overheadcosts to plan its operations. A recent tradepublication revealed that overhead coststend to vary with machine hours. To checkthis, they collected the following data forthe past 12 months.Month Machine Hours Overhead costsP4,5004,2254,3215,2504,8005,1004,4504,2005,4754,7604,3253,97511752170316041901752001606.78.1509.210101801117012145Requirements:1. Use the high-low method to estimatethe fixed and variable portion ofoverhead costs based on machinehours.2. If the plant is planning to operate at alevel of 300 machine hours, next period,what would be the estimated overheadcosts?3. Use the method of least square toestimate the fixed and variable portionof overhead costs based on machinehours.

Total cost (TC) = F + vQ where F: Fixed cost, v: Overhead cost per hour & Q: Number of machine…

1. Use the high-low method to estimate the fixed and variable portion of overhead costs based on machine hours. 2. If the plant is planning to operate at a level of 300 machine hours, next period, what would be the estimated overhead costs?

1. Use the high-low method to estimate the fixed and variable portion of overhead costs based on machine hours. 2. If the plant is planning to operate at a level of 300 machine hours, next period, what would be the estimated overhead costs?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 3MC

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Question

Instructions
Send pictures of your written computation.
Double rule final answers.
Management wants to estimate overhead
costs to plan its operations. A recent trade
publication revealed that overhead costs
tend to vary with machine hours. To check
this, they collected the following data for
the past 12 months.
Month Machine Hours Overhead costs
P4,500
4,225
4,321
5,250
4,800
5,100
4,450
4,200
5,475
4,760
4,325
3,975
1
175
2
170
3
160
4
190
175
200
160
6.
7
8.
150
9.
210
10
180
11
170
12
145
Requirements:
1. Use the high-low method to estimate
the fixed and variable portion of
overhead costs based on machine
hours.
2. If the plant is planning to operate at a
level of 300 machine hours, next period,
what would be the estimated overhead
costs?
3. Use the method of least square to
estimate the fixed and variable portion
of overhead costs based on machine
hours.

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