**PLEASE SHOW FULL WORK AND EXPLANATIONS. REALLY NEED TO UNDERSTAND HOW THIS WORKS.***

1. Enterprise is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 20,000 units for the first year of production are: Direct materials $1,000,000 Direct labor $720,000 (based on $18 per hour 40,000 hours)

Although overhead has not been estimated for the new product, monthly data for Enterprises total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows:

Dependent variable	Factory overhead costs
Independent variable	Direct labor hours
Intercept	$120,000
Coefficient on independent variable	$5.00
R2	0.814

**PLEASE SHOW FULL WORK AND EXPLANATIONS. REALLY NEED TO UNDERSTAND HOW THIS WORKS.***

a) What percentage of the variation in overhead cost is explained by direct labor hours?

b) What is the total overhead cost for an estimated activity level of 45,000 direct labor hours?

c) How much is the variable manufacturing cost per unit, using the variable overhead estimated by the regression model?