Ken Howard, financial analyst at KMW Corporation, is examining the behavior of quarterlymaintenance costs for budgeting purposes. Howard collects the following data on machinehours worked and maintenance costs for the past 12 quarters:QuarterMachine-Hours20,00024,00022,00026,00018,000ITTMaintenance Costs$ 41,00048,00044,00052,00038,00047,00043,00051,00021,00042,00025,00049,0001128,00056,0001227,00057,0001234567890=223,00021,00025,000Required:1. Estimate the cost function for the quarterly data using the high-low method.2. Apply Excel to estimated cost function based on the regression method. Plot the resultsand explain the main contents of the regression table.3. Howard anticipates that KMW will operate machines for 30,000 hours in quarter 13.Calculate the predicted maintenance costs in quarter 13 using the cost function estimatedin requirement 1 and requirement 2. Comment on the accuracy of both methods andwhich one you will select for future estimation?

Estimate the cost function for the quarterly data using the high-low method:To estimate the cost…

Answered: Ken Howard, financial analyst at KMW…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Elroy Corporation bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $2.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $198,560 per month, which includes depreciation of $28,970. All other fixed manufacturing overhead costs represent current cash flows. The July direct labor budget indicates that 9,800 direct labor-hours will be required in that month. Required: SHOW YOUR WORK in budget format a. Determine the cash disbursements for manufacturing overhead in good form, including heading, for January 2024b. Determine the predetermined overhead rate for July. (Round your answer to 2 decimal places.)
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Gardner Corporation manufactures skateboards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below. Sales $ 1,500,000 Cost of sales: Direct Material $ 250,000 Direct labor 150,000 Variable Overhead 75,000 Fixed Overhead 100,000 575,000 Gross Profit $ 925,000 Selling and G&A Variable 200,000 Fixed 250,000 450,000 Operating Income $ 475,000 The break-even point (rounded to the nearest dollar) for Gardner Corporation for the current year is:
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Astroll Mahato Company has provided the following report for the most recent period. Astroli Mahato Company For the Period Ended March 31 Actual Results Planning Budget Machine-hours Direct labor wages Supplies Maintenance Utilities Supervision Depreciation Total 42,000 $ 74,000 40,000 $ 72,400 22,300 20,800 22,500 20,500 20,200 19,100 43,000 43,000 71,000 $ 253,000 71,000 $ 246,800 Direct labor wages and supplies are variable costs; supervision and depreciation are fixed costs; and maintenance and utilities are mixed costs. The fixed component of the budgeted maintenance cost is $12,900; the fixed component of the budgeted utilities cost is $13,000. Required: 2. Complete the performance report below to calculate the spending variances for the period. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Astroli Mahato…
The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 5,800 direct labor-hours will be required in May. The variable overhead rate is $9.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $104,400 per month, which includes depreciation of $8,120. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. What should be the predetermined overhead rate for May?
Nathan Davidson, financial analyst at LMN Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Davidson collects the following data on machine-hours worked and utility costs for the past 8 quarters: (Click the icon to view the data.) Read the requirements. Requirement 1. Estimate the cost function for the quarterly data using the high-low method. (Complete all answer boxes.) Data table + Quarter Machine-Hours Utility Costs Quarter 1 100,000 $ 265,000 Quarter 2 55,000 200,000 Quarter 3 90,000 250,000 Quarter 4 105,000 280,000 Quarter 5 70,000 220,000 Quarter 6 95,000 260,000 Quarter 7 85,000 275,000 Quarter 8 80,000 245,000 Print Done - ☑ Requirements 1. Estimate the cost function for the quarterly data using the high-low method. 2. Plot and comment on the estimated cost function. 3. Davidson anticipates that LMN will operate machines for 105,000 hours in quarter 9. Calculate the predicted utility costs in quarter 9 using the cost function estimated…
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The manufacturing overhead budget of Reigle Corporation is based on budgeted direct labor-hours. The February direct labor budget indicates that 5 direct labor-hours will be required in that month. The variable overhead rate is $4.7 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $82,610 per month, which includes depreciation of $17,070. All other fixed manufacturing overhead costs represent current cash flows. Required: 1. Determine the cash disbursements for manufacturing overhead for February 2. Determine the predetermined overhead rate for February. Note: Round your answer to 2 decimal places. 1. Cash disbursements for manufacturing overhead 2. Predetermined overhead rate
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