The controller for Muir Company’s Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible biidow tim cl Cla eee nem past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on overhead costs, number of machine hours, number of setups, and number of purchase orders are in the following table.

Required:
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 to the nearest dollar.) Is this flexible budget better than the budget in Requirement 1? Why or why not?LO1

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Month Overhead Costs Machine Number of Number of Purchase Hours Setups Orders January $ 32,296 1,000 February 31,550 930 March 36,280 1,100 April 36,867 1,050 May 36,790 1,170 June 37,800 1,200 July 40,024 1,235 August 39,256 1,190 September 33,800 1,070 October 33,779 1,210 November 37,225 1,207 December 27,500 1,084 Totals $423,167 13,446 260 2222222222222 216 250 300 270 285. 240 237 24 303 255 195 270 15 150 2,971