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, and b) regression analysis Show the cost formula from each calculation in the form Overhead Fixed cost MH (Variable OH per unit) 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

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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, and b) regression analysis. Show the cost formula from each calculation in the form:

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

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

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