5-33. Methods of Estimating Costs: High-Low (LO 5-4) Adriana Corporation manufactures football equipment. In planning for...

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5-33. Methods of Estimating Costs: High-Low (LO 5-4) Adriana Corporation manufactures football equipment. In planning for next year, the manag- ers want to understand the relation between activity and overhead costs. Discussions with the excel plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year's operations: Month Labor-Hours Machine-Hours Overhead Costs 10 11 12 -23456789DW2 1 3,625 6,775 $513,435 3,575 7,035 518,960 3,400 7,600 549,575 3,700 7,265 541,400 3,900 7,955 581,145 3,775 7,895 572,320 3,700 6,950 535,110 3,625 6,530 510,470 3,550 7,270 532,195 3,975 7,725 565,335 3,375 6,490 503,775 3,550 8,020 564,210 Required a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours. b. Managers expect the plant to operate at a monthly average of 7,500 machine-hours next year. What are the estimated monthly overhead costs, assuming no inflation? 5-34 Methods of Estimating Costs: Scattergraph (LO 5-4) Prepare a scattergraph based on the overhead and machine-hour data in Exercise 5-33. 5-33. Methods of Estimating Costs: High-Low (LO 5-4) Adriana Corporation manufactures football equipment. In planning for next year, the manag- ers want to understand the relation between activity and overhead costs. Discussions with the excel plant supervisor suggest that overhead seems to vary with labor-hours, machine-hours, or both. The following data were collected from last year's operations: Month Labor-Hours Machine-Hours Overhead Costs 10 11 12 -23456789DW2 1 3,625 6,775 $513,435 3,575 7,035 518,960 3,400 7,600 549,575 3,700 7,265 541,400 3,900 7,955 581,145 3,775 7,895 572,320 3,700 6,950 535,110 3,625 6,530 510,470 3,550 7,270 532,195 3,975 7,725 565,335 3,375 6,490 503,775 3,550 8,020 564,210 Required a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on machine-hours. b. Managers expect the plant to operate at a monthly average of 7,500 machine-hours next year. What are the estimated monthly overhead costs, assuming no inflation? 5-34 Methods of Estimating Costs: Scattergraph (LO 5-4) Prepare a scattergraph based on the overhead and machine-hour data in Exercise 5-33.