Question: InStay would like to predict their total monthly overhead cost based on machine hours (DLH) used. Data for the last 24 months is below. Required:

InStay would like to predict their total monthly overhead cost based on machine hours (DLH) used. Data for the last 24 months is below.

Required:

1. Use this data to prepare cost formulas using

a) the high-low method

b) regression analysis.

Show the cost formula from each calculation in the form:

Overhead = Fixed cost + MH*(Variable OH per unit)

2. Assume that InStay decides to use the cost formula from the regression analysis. Briefly explain in your own words how the company will make use of the formula.

MH	OH
129,088	2,300,451
106,612	1,878,012
105,028	1,829,452
129,107	2,313,372
110,759	1,813,767
124,427	2,186,002
102,049	1,707,997
131,238	2,197,812
101,943	1,787,236
133,884	2,228,998
101,270	1,791,169
134,175	2,367,479
113,797	1,917,197
101,508	1,837,012
130,316	2,239,440
101,532	1,783,849
93,878	1,578,677
123,525	2,168,136
127,824	2,193,289
104,205	1,750,702
102,958	1,830,086
134,706	2,394,475
116,636	2,063,260
97,906	1,690,091

Step by Step Solution

★★★★★

3.52 Rating (149 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Answer 1a highlow mthod MH OH 129088 2300451 OH at high level activity 2394475 106612 1878012 OH at ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Bud Bunyan opened Bunyan's Supply five years ago. Over the years he has been pleased with its performance, as sales and profits have steadily increased. Recently, however, Bud bas been having...

Briefly explain in your own words the following: What does a balance sheet convey to readers? What makes a balance sheet useful? What are the limitations of a GAAP balance sheet? What role do...

Explain in your own words how tools such as master scheduling, MRP, and DRP can be used to coordinate activity up and down a supply chain. For example, what information might we share with our...

Explain in your own words how Monte Carlo simulation may be useful to a decision maker.

Batchelor, LLP, an accounting firm, has customers who pay flat monthly fees for services, others who pay by the hour, and still other customers who pay flat fees plus hourly fees. Batchelor wants to...

Swartz Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Deluxe textbooks are made...

Watson Products Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Marlon Burke, the plant manager, has heard that departmental overhead...

Suncoast Industries uses standard costing and a flexible budget for cost planning and control. Its monthly budget for overhead costs is $200,000 of fixed costs plus $5.20 per machine hour. Monthly...

Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own divisions return on investment (ROI). Assume the following information relative...

Schweser Satellites Inc. produces satellite earth stations that sell for $100,000 each. The firms fixed costs, F, are $2 million; 50 earth stations are produced and sold each year; profits total...

(a) Show that for a wave on a string, the kinetic energy per unit length of string is Where /L is the mass per unit length. (b) Calculate Uk(X, t) for a sinusoidal wave given by Eq. (15.7). (c) There...

How should additions or improvements representing an increase in the usefulness of plant assets be entered?

B wrote S, his sister, to sell his parcel of land. The land was purchased by X, but S did not forward the money to B. Now, B wants to recover the parcel of land. Is the sale valid? Why? Can B recover...

P9.20 The Bell-Boeing V-22 Osprey Tiltrotor is both an airplane and a helicopter. Its advantage is the abil ity to rotate its engines to a vertical position, as shown in Figure P7.33(a), for takeoffs...

At the end of the day, the cash register tape lists $881.40 as total income from services. Cash on hand consist of $18.25 in coins, $433.60 in currency, $100.00 in travelers checks, and $427.00...

1. Create an Event class that will be the parent class of other classes such as Competition, Party, Conference, Concert (you don't have to write the other 3 child classes, so you can relax). Event,...

1. Complete the following tables. a) Name each compound. Chemical Formula Chemical Name NaS 2 KClO 3 NO 2 CuSO 4 Mn 3 P 7 b) Write the correct formula for each compound. /2.5 Chemical Name Chemical...

Identify and briefly describe some of the restraining forces that impede growth of global marketing. .

The small-brained Plio-Pleistocene hominids are referred to as the __________. This genus is divided further into two groups, the ________ and the robust forms. Many scientists prefer to separate the...

InStay would like to predict their total monthly overhead cost based on machine hours (DLH) used. Data for the last 24 months is below. Required: 1. Use this data to prepare cost formulas using a)...

How to prepare this formulas using data below? 5. Cuni Culara would like to predict their total monthly overhead cost based on machine hours (MH) used. Data for the last 24 months is in the...

COMPREHENSIVE CASE 1 Chapters 2?4 CableTech Bell Corporation (CTB) operates in the telecommunications industry. CTB has two divisions: the Phone Division and the Cable Service Division. The Phone...

Please see attached questions. Need to be done in Excel and it has to show calculations and/or formulas. COMPREHENSIVE CASE 1 Chapters 2-4 CableTech Bell Corporation (CTB) operates in the...

The Cable Service Division reported the following activity for the month of March: Basic Enhanced Premium Sales (units) 50,000 500,000 300,000 Price per unit $32 $60 $90 Unit costs: Directly traced...