Mary Ellis owns a small manufacturing company and would like to develop more accurate estimates for overhead expenses when making planning decisions. She is pretty sure that overhead is a mixed cost that varies with direct labour-hours but she would like to do a proper analysis to determine the variable and fixed components. She collected the following information for the past 12 months on direct labour-hours incurred and total overhead expenses. Month January February March rit May June July August September October November December Direct Labour-Hours 1,500 1,688 1,800 2,520 2,700 3,300 Pram 3,900 4,500 4,200 2,700 1,860 3,900 Variable overhead cost Totalfixed cost Total Overhead Costs $44,000 $47,200 $48,000 $51,200 $53,600 $56,800 $59,200 $61,600 $60,000 $54,400 $49,600 $58,400 Required: 1. Using the least-squares regression method, estimate the variable overhead cost per direct labour-hour and the total fixed overhead cost per month. (Round Fixed cost to the nearest whole dollar amount and the Variable cost per direct labour-hour to 2 decimal places.) per direct labour-hour per month 2. Express the cost data derived in part 1 above in the form Y= a + bx (Round Fixed cost to the nearest whole dollar amount and the Variable cost to 2 decimal places.) Y= X 3. Using the cost formula stated in part 2, estimate total overhead costs for a month where direct labour-hours are expected to be 3,900. (Round your Variable cost per direct labor hour to 2 decimal places and round your final answer to the nearest whole dollar amount.) Total overhead costs
Mary Ellis owns a small manufacturing company and would like to develop more accurate estimates for overhead expenses when making planning decisions. She is pretty sure that overhead is a mixed cost that varies with direct labour-hours but she would like to do a proper analysis to determine the variable and fixed components. She collected the following information for the past 12 months on direct labour-hours incurred and total overhead expenses. Month January February March rit May June July August September October November December Direct Labour-Hours 1,500 1,688 1,800 2,520 2,700 3,300 Pram 3,900 4,500 4,200 2,700 1,860 3,900 Variable overhead cost Totalfixed cost Total Overhead Costs $44,000 $47,200 $48,000 $51,200 $53,600 $56,800 $59,200 $61,600 $60,000 $54,400 $49,600 $58,400 Required: 1. Using the least-squares regression method, estimate the variable overhead cost per direct labour-hour and the total fixed overhead cost per month. (Round Fixed cost to the nearest whole dollar amount and the Variable cost per direct labour-hour to 2 decimal places.) per direct labour-hour per month 2. Express the cost data derived in part 1 above in the form Y= a + bx (Round Fixed cost to the nearest whole dollar amount and the Variable cost to 2 decimal places.) Y= X 3. Using the cost formula stated in part 2, estimate total overhead costs for a month where direct labour-hours are expected to be 3,900. (Round your Variable cost per direct labor hour to 2 decimal places and round your final answer to the nearest whole dollar amount.) Total overhead costs
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Q4
Mary Ellis owns a small manufacturing company and would like to develop more accurate estimates for overhead expenses when
making planning decisions. She is pretty sure that overhead is a mixed cost that varies with direct labour-hours but she would like to
do a proper analysis to determine the variable and fixed components. She collected the following information for the past 12 months
on direct labour-hours incurred and total overhead expenses.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Direct
Labour-Hours
1,500
1,680
1,800
2,520
2,700
3,300
3,900
Variable overhead cost
Total fixed cost
4,500
4,200
2,700
1,860
3,900
Total Overhead
Costs
$44,000
$47,200
$48,000
$51,200
$53,600
$56,800
$59,200
$61,600
$60,000
$54,400
$49,600
$58,400
Required:
1. Using the least-squares regression method, estimate the variable overhead cost per direct labour-hour and the total fixed overhead
cost per month. (Round Fixed cost to the nearest whole dollar amount and the Variable cost per direct labour-hour to 2 decimal
places.)
per direct labour-hour
per month
2. Express the cost data derived in part 1 above in the form Y= a + bX. (Round Fixed cost to the nearest whole dollar amount and the
Variable cost to 2 decimal places.)
Y=
X
3. Using the cost formula stated in part 2, estimate total overhead costs for a month where direct labour-hours are expected to be
3,900. (Round your Variable cost per direct labor hour to 2 decimal places and round your final answer to the nearest whole dollar
amount.)
Total overhead costs
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