1. Use the four steps of the high-low method to estimate total fixed costs per month and the variable cost per machine hour. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v.

2. Use the five steps of the scatter graph method to estimate total fixed costs per month, and the variable cost per machine hour. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v.

3. Use regression analysis in Excel (or other spreadsheet software program) to estimate total fixed costs per month, and the variable cost per machine hour. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v. (Hint: either follow the four steps in Section 5.5, or use the Excel functions =INTERCEPT(), =SLOPE(), and =RSQ().)

4. Use the results of the high-low method (a), scatter graph method (b), and regression analysis (c), to estimate costs for 1,500 machine hours. (You will have three different answers—one for each method.) Which approach do you think is most accurate and why?
 

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7. Woodworks, Inc., produces cabinet doors. Manufacturing overhead costs tend to fluctuate from one month to the next, and management would like to accurately estimate these costs for planning and decision-making purposes. The accounting staff at Woodworks recommends that costs be broken down into fixed and variable components. Because the production process is highly automated, most of the manufacturing overhead costs are related to machinery and equipment. The accounting staff believes the best starting point is to review historical data for costs and machine hours: Reporting Period (Month) January February Total Costs Machine ($) 278,000 Hours 1,550 1,570 1,115 280,000 March 266,000 April May 290,000 1,700 262,000 1,110 June 269,000 1,225 July August September October 275,000 286,000 1,335 1,660 250,000 1,000 253,000 260,000 281,000 1,020 1,025 1,600 November December 7. Woodworks, Inc., produces cabinet doors. Manufacturing overhead costs tend to fluctuate from one month to the next, and management would like to accurately estimate these costs for planning and decision-making purposes. The accounting staff at Woodworks recommends that costs be broken down into fixed and variable components. Because the production process is highly automated, most of the manufacturing overhead costs are related to machinery and equipment. The accounting staff believes the best starting point is to review historical data for costs and machine hours: Reporting Period (Month) January February Total Costs Machine ($) 278,000 Hours 1,550 1,570 1,115 280,000 March 266,000 April May 290,000 1,700 262,000 1,110 June 269,000 1,225 July August September October 275,000 286,000 1,335 1,660 250,000 1,000 253,000 260,000 281,000 1,020 1,025 1,600 November December

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3 The general form of linear regression equation is y b 0 ... View the full answer