Susan was attempting to estimate a model for her small business's overhead costs. She is 99.9% sure that overhead costs are drivenprimarily by production, but she also knows that this cost isn't entirely variable. So she grabbed the last 8 months of production andoverhead cost data, listed it out, and plotted it as follows.Month # of Units Produced1234567008(a1)250210280340360320270290Your answer is correct.Overhead Cost$3,5102,6403,2704,0903,8403,9203,2304,080WSusan is planning to use the high-low method to estimate this cost function. Is it important for the data to exhibit a linearrelationship when using this method?

Name: Susan was attempting to estimate a model for her small business's ove
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Description: Susan was attempting to estimate a model for her small business's overhead costs. She is 99.9% sure that overhead costs are drivenprimarily by production, but she also knows that this cost isn't entirely variable. So she grabbed the last 8 months of

High-low method is used to bifurcate the mixed cost into fixed and variable costs. Although high-low…

Business

Accounting

Susan was attempting to estimate a model for her small business's overhead costs. She is 99.9% sure that overhead costs are driven primarily by production, but she also knows that this cost isn't entirely variable. So she grabbed the last 8 months of production and overhead cost data, listed it out, and plotted it as follows.

Susan was attempting to estimate a model for her small business's overhead costs. She is 99.9% sure that overhead costs are driven primarily by production, but she also knows that this cost isn't entirely variable. So she grabbed the last 8 months of production and overhead cost data, listed it out, and plotted it as follows.

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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You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March $ 24,200 $ 78,100 Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $20,600 + $0.10 per machine-hour $40,000 +$1.60 per machine-hour $0.30 per machine-hour $130,000 + $0.70 per machine-hour $70,000 $ 8,400 $ 149,600 $ 71,500 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March.…
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in March Utilities $16,000 + $0.12 per machine-hour $ 19,960 Maintenance $38,700 + $2.00 per machine-hour $ 68,500 Supplies $0.80 per machine-hour $ 14,200 Indirect labor $94,500 + $1.90 per machine-hour $ 129,600 Depreciation $67,800 $ 69,500 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000…
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in March Utilities $16,000 + $0.21 per machine-hour $ 23,050 Maintenance $38,200 + $1.80 per machine-hour $ 77,000 Supplies $0.80 per machine-hour $ 19,800 Indirect labor $94,800 + $1.60 per machine-hour $ 135,700 Depreciation $67,900 $ 69,600 During March, the company worked 23,000 machine-hours and produced 17,000 units. The company had originally planned to work 25,000…
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president asked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,900 + $0.15 per machine-hour $38,600 + $1.80 per machine-hour $0.30 per machine-hour $94,300 + $1.30 per machine-hour $67,500 Actual Cost in March $ 21,400 $ 64,800 $ 5,200 $ 118,600 $ 69,200 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company originally planned to work 18,000 machine-hours during March. Required: 1.…
Ethan Manufacturing Incorporated produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours. These data are from the previous fiscal year for maintenance costs and machine hours: 1. What is the cost equation for maintenance costs using the high-low method? 2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1. Month Maintenance Costs Machine Hours 1 $ 2,660 1,750 2 2,820 1,830 3 2,970 1,910 4 3,080 1,930 5 3,160 1,960 6 3,130 1,940 7 3,070 1,920 8 2,910 1,900 9 2,680 1,760 10 2,280 1,160 11 2,290 1,360 12 2,510 1,650
Please help me with Req 4. If someone can help I will give a thumbs up. If you zoom in I believe the image should beome clearer. Thanks!
The managerial accountant at Sunny Manufacturing needs to determine how many costs are fixed costs and how many costs are variable costs in the organization. The managerial accountant reported the following information: Use the high-low method to determine the cost equation and use machine hours as the base for a cost driver in the analysis. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). Month Machine-Hours Total Cost January 1,800 $21,500 February 2,900 $23,200 March 1,000 $19,750 April 2,400 $21,000 May 3,400 $23,900
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in March Utilities $16,200 + $0.20 per machine-hour $ 21,600 Maintenance $38,100 + $1.70 per machine-hour $ 62,500 Supplies $0.80 per machine-hour $ 14,200 Indirect labor $94,100 + $1.60 per machine-hour $ 123,800 Depreciation $67,900 $ 69,600 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March.…
Ryan: Kaylin, this also sounds good to me. Go ahead and include the carrying cost in your computation. To help in the analysis, Kaylin gathered the following data for LLHC for 2011: Tons sold: 10 Average cartons per shipment: 2 Average shipments per ton: 7 1)After receiving the analysis of LLHC, Ryan decided to expand the analysis to all products. He also had Kaylin reevaluate the way in which mill overhead was assigned to products. After the restructuring was completed, Ryan took the following actions: (a) the prices of most low-volume products were increased, (b) the prices of several high-volume products were decreased, and (c) some low-volume products were dropped. Explain why his strategy changed so dramatically.
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…
If someone can help me soon I will give a thumbs up. Please hurry if possible! Thanks! :)
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president asked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,200 + $0.17 per machine-hour $38,700 +$1.50 per machine-hour $0.70 per machine-hour $94,300 +$1.10 per machine-hour $68,100 Actual Cost in March $ 21,570 $ 64,000 $ 14,500 $ 118,300 $ 69,800 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company originally planned to work 21,000 machine-hours during March. Required: 1. Calculate…