The controller for Muir Company's Salem plant is analyzing overhead in order to determine appropriate drivers for
Question:
1. Calculate an overhead rate based on machine hours using the total overhead cost and total machine hours. (Round the overhead rate to the nearest cent and predicted overhead to the nearest dollar.) Use this rate to predict overhead for each of the 12 months.
2. Run a regression equation using only machine hours as the independent variable. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the intercept and x-coefficient to the nearest cent and predicted overhead amount to the nearest dollar.)
Type the letter "F" in the last column of the table to indicate a favorable variance. Type the letter "U" to indicate an unfavorable variance. Enter all your answers as positive amounts.
Step by Step Answer:
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen