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. Total Overhead Costs $44,000 Month January Direct Labour-Hours 1,500 February 1,680 $ 47,200 March 1,000 $ 48,000 April 2,520 $ 51,200. May 2,700 $ 53,600 June 3,300 $ 56,000 July 3,900 $ 59,200 August 4,500 $ 61,600 September 4,200 $ 60,000 October 2,700 $ 54,400 November 1,800 $49,600 December 3,900 $ 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 doller amount and the Variable cost per direct labour-hour to 2 decimal places.) Variable overhead cost Total fixed cost 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.) 3. Using the cost formula stated in part 2, estimate total overhead costs for a month where direct labour-hours are expected to be 3.000 (Round your Variable cost per direct labor hour to 2 decimal places and round your final answer to the nearest whole dollar AMAUNE
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. Total Overhead Costs $44,000 Month January Direct Labour-Hours 1,500 February 1,680 $ 47,200 March 1,000 $ 48,000 April 2,520 $ 51,200. May 2,700 $ 53,600 June 3,300 $ 56,000 July 3,900 $ 59,200 August 4,500 $ 61,600 September 4,200 $ 60,000 October 2,700 $ 54,400 November 1,800 $49,600 December 3,900 $ 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 doller amount and the Variable cost per direct labour-hour to 2 decimal places.) Variable overhead cost Total fixed cost 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.) 3. Using the cost formula stated in part 2, estimate total overhead costs for a month where direct labour-hours are expected to be 3.000 (Round your Variable cost per direct labor hour to 2 decimal places and round your final answer to the nearest whole dollar AMAUNE
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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.
Total Overhead
Costs
$44,000
Month
January
Direct
Labour-Hours
1,500
February
1,680
$ 47,200
March
1,000
$ 48,000
April
2,520
$ 51,200.
May
2,700
$ 53,600
June
3,300
$ 56,000
July
3,900
$ 59,200
August
4,500
$ 61,600
September
4,200
$ 60,000
October
2,700
$ 54,400
November
1,800
$49,600
December
3,900
$ 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 doller amount and the Variable cost per direct labour-hour to 2 decimal
places.)
Variable overhead cost
Total fixed cost
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.)
3. Using the cost formula stated in part 2, estimate total overhead costs for a month where direct labour-hours are expected to be
3.000 (Round your Variable cost per direct labor hour to 2 decimal places and round your final answer to the nearest whole dollar
AMAUNE
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