Acct$353$

Ch$3$ Group Extra Credit $(5$ points$)$

The following information is available for Morgan Company:

$\backslash$table$[[$Month$,\backslash$table$[[$Overhead$],[$Costs$]],\backslash$table$[[$Machine$],[$Hours$]],\backslash$table$[[$Pounds of$],[$Material$]],\backslash$table$[[$Direct Labor$],[$Hours$]]],[1,70,036,995,830,300,855],[2,87,036,1,263,1,248,300,441],[3,86,503,1,387,876,300,453],[4,90,010,1,516,960,300,603],[5,84,360,988,1,358,300,380],[6,83,140,1,022,1,334,300,458],[7,79,273,967,1,162,300,209],[8,83,314,1,475,958,300,932],[9,78,309,981,1,230,300,505],[10,72,783,905,980,300,632],[11,79,284,1,207,892,300,576],[12,86,330,1,264,1,164,300,357],[13,70,823,964,894,300,305],[14,86,471,986,1,378,300,629],[15,78,106,1,052,1,162,300,797],[16,70,877,938,930,300,1003],[17,77,669,984,1,222,300,582],[18,75,923,1,166,1,066,300,198],[19,80,079,1,371,832,300,231],[20,73,170,1,088,1,036,300,738],[21,76,787,896,1,282,300,440],[22,80,205,1,224,1,098,300,187],[23,80,972,1,290,852,300,632],[24,88,177,1,223,1,392,300,308],[25,76,996,984,938,300,737],[26,83,535,1,051,1,322,300,752],[27,75,501,1,007,958,300,176],[28,85,690,1,147,1,306,300,157],[29,85,011,1,362,1,240,300,916],[30,79,055,1,053,1,028,300,869],[,,,,],[,,,,]]$

Required:

a$.$ Using the method of least squares, develop a cost function for monthly overhead costs using machine hours, pounds of material, and direct labor hours as the cost drivers.

b$.$ Recalculate the cost function making any necessary changes.

c$.$ Use the analysis process described in class to determine the suitability of the cost function.

e$.$ Estimate overhead costs for a month in which $1,400$ machine hours are worked and $1\mathrm{.}3$ million pounds of materials are used.

f$.$ Prepare a $90\%$ confidence interval for the estimate of monthly overhead costs $.$

$1$