Interpreting Regression Results—Process Costing: (Knowledge of equivalent units is required for this problem.) Management of Waverly Processing. Inc., wants to obtain better cost estimates to evaluate the company's operations more satisfactorily. As a new management trainee, you recall some of the cost-estimation techniques discussed in cost accounting and suggest that these tech- niques may be useful in this situation. The following data are given to you for analysis purposes:

Last month, the beginning work in process inventory contained 1,000 units that were 65 percent complete with respect to conversion costs. The manufacturing department transferred out 1,500 units last month. There were 1,200 units in ending inventory, and these units were 30 percent complete with respect to conversion costs.

Using the above information, you go to the regression program in your computer and obtain the following output:

Required:

a. Use the high-low method to estimate the overhead cost function.

b. Use the regression method to estimate the overhead cost function.

c. Compute the equivalent units of production with respect to conversion costs for last month.

d. Use the regression results to estimate the overhead costs for last month

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Month Equivalent Production 1,425 Overhead $12,185 11 1234567890-2 950 9,875 1,130 10,450 1,690 15,280 1,006 9,915 834 9,150 982 10,133 1,259 11,981 1,385 12,045 1,420 13,180 1,125 11,910 980 10.431