Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces...

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Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of factory overhead. The plant manager, who has just been promoted, would like to understand how overhead costs fluctuate in order to improve planning and budgets. After discussions with both financial and operations members of the plant staff, there is general agreement that the best cost driver for overhead is machine-hours. Monthly data were collected from the most recent two years on machine-hours and overhead. More months of data were available, but a process change had taken place about 30 months earlier, so the staff believed any data from before that time would be misleading. The data are shown in the following table: Month 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 XER48656 17 18 19 20 21 22 23 24 Machine-Hours 40,000 38,000 30,800 43,100 51,300 46,200 43,100 62,800 37,000 54,400 53,400 37,000 60,600 59,600 46,200 40,000 56,500 51,300 61,600 50,300 54,400 29,800 60,600 59,600 Factory Overhead $ 527,800 417,200 366,500 498,900 591,400 504,100 477,600 714,650 426,000 661,700 617,400 491,200 693,700 655,400 580,700 528,600 684,100 614,400 670,200 619,800 672,800 445,700 693,100 719,200 a. Use the high-low estimation method to estimate the overhead cost behavior (fixed and variable components of cost) for the Goulburn plant b. Prepare a scattergraph showing the overhead costs plotted against the machine-hours. c. Use a spreadsheet program to compute regression coefficients to describe the overhead cost equation. d. Use the results of your regression analysis to develop an estimate of overhead costs assuming 48,000 machine-hours will be worked next month. Complete this question by entering your answers in the tabs below. Required A Required C Required D Use the high-low estimation method to estimate the overhead cost behavior (fixed and variable components of cost) for the Goulburn plant. Note: Round variable cost per unit to 2 decimal places. Overhead costs per Machine hour Machine-hours Required A Required C > M ces b. Prepare a scattergraph showing the overhead costs plotted against the machine-hours. Instructions: 1. Click on a point to the right of the graph. 2. Click within the graph to place the point. 3. Enter the exact coordinates in the dialog box that appears to the right of the graph. 4. Click save. 5. To change coordinates already saved, click on a point already placed in the graph, and enter revised coordinates in the dialog box that opens. Factory Overhead (in dollars) 900000 800000 700000 600000 500000 400000 300000 200000 100000 025000 Goulburn, Incorporated 29000 33000 37000 41000 45000 49000 53000 Machine-Hours 57000 61000 Tools Month 1 65000 . Month 31 . Month 5 Month 2 . Month 4 . Month 6 Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of factory overhead. The plant manager, who has just been promoted, would like to understand how overhead costs fluctuate in order to improve planning and budgets. After discussions with both financial and operations members of the plant staff, there is general agreement that the best cost driver for overhead is machine-hours. Monthly data were collected from the most recent two years on machine-hours and overhead. More months of data were available, but a process change had taken place about 30 months earlier, so the staff believed any data from before that time would be misleading. The data are shown in the following table: Month 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 XER48656 17 18 19 20 21 22 23 24 Machine-Hours 40,000 38,000 30,800 43,100 51,300 46,200 43,100 62,800 37,000 54,400 53,400 37,000 60,600 59,600 46,200 40,000 56,500 51,300 61,600 50,300 54,400 29,800 60,600 59,600 Factory Overhead $ 527,800 417,200 366,500 498,900 591,400 504,100 477,600 714,650 426,000 661,700 617,400 491,200 693,700 655,400 580,700 528,600 684,100 614,400 670,200 619,800 672,800 445,700 693,100 719,200 a. Use the high-low estimation method to estimate the overhead cost behavior (fixed and variable components of cost) for the Goulburn plant b. Prepare a scattergraph showing the overhead costs plotted against the machine-hours. c. Use a spreadsheet program to compute regression coefficients to describe the overhead cost equation. d. Use the results of your regression analysis to develop an estimate of overhead costs assuming 48,000 machine-hours will be worked next month. Complete this question by entering your answers in the tabs below. Required A Required C Required D Use the high-low estimation method to estimate the overhead cost behavior (fixed and variable components of cost) for the Goulburn plant. Note: Round variable cost per unit to 2 decimal places. Overhead costs per Machine hour Machine-hours Required A Required C > M ces b. Prepare a scattergraph showing the overhead costs plotted against the machine-hours. Instructions: 1. Click on a point to the right of the graph. 2. Click within the graph to place the point. 3. Enter the exact coordinates in the dialog box that appears to the right of the graph. 4. Click save. 5. To change coordinates already saved, click on a point already placed in the graph, and enter revised coordinates in the dialog box that opens. Factory Overhead (in dollars) 900000 800000 700000 600000 500000 400000 300000 200000 100000 025000 Goulburn, Incorporated 29000 33000 37000 41000 45000 49000 53000 Machine-Hours 57000 61000 Tools Month 1 65000 . Month 31 . Month 5 Month 2 . Month 4 . Month 6