doors. Manufacturing overhead costs tend to fluctuate from one month to the next, and management would...

  

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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) Total Costs Machine Hours January $278,000 February March April May 280,000 266,000 290,000 262,000 1,550 1,570 Woodworks, Inc., produces cabinet 1,115 1,700 1,110 June July August September October November December y-intercept 210,766 xvariable 45.31 C. d. 269,000 275,000 286,000 250,000 253,000 260,000 281,000 Required: a. 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. b. Use the five steps of the scattergraph 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. Use the regression output given to develop the cost equation Y=f+ vX by filling in the dollar amounts for fand v. Use the results of the high-low method (a), scattergraph 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? Management likes the regression analysis approach and asks you to estimate costs for 5,000 machine hours using this approach (the company plans to expand by opening another facility and hiring additional employees). Calculate your estimate, and explain why your estimate might be misleading. e. 1,225 1,335 1,660 1,000 1,020 1,025 1,600 These data were entered into a computer regression program, which produced the following output: Coefficients 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) Total Costs Machine Hours January $278,000 February March April May 280,000 266,000 290,000 262,000 1,550 1,570 Woodworks, Inc., produces cabinet 1,115 1,700 1,110 June July August September October November December y-intercept 210,766 xvariable 45.31 C. d. 269,000 275,000 286,000 250,000 253,000 260,000 281,000 Required: a. 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. b. Use the five steps of the scattergraph 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. Use the regression output given to develop the cost equation Y=f+ vX by filling in the dollar amounts for fand v. Use the results of the high-low method (a), scattergraph 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? Management likes the regression analysis approach and asks you to estimate costs for 5,000 machine hours using this approach (the company plans to expand by opening another facility and hiring additional employees). Calculate your estimate, and explain why your estimate might be misleading. e. 1,225 1,335 1,660 1,000 1,020 1,025 1,600 These data were entered into a computer regression program, which produced the following output: Coefficients

Answer rating: 100% (QA)

SOLUTION a HighLow Method Step 1 Identify the highest and lowest activity levels and their corresponding costs Highest activity level April 1700 machine hours 290000 Lowest activity level September 10... View the full answer