Analyze cost behavior (Learning Objectives 1, 2, 3, 4L}

Braunhaus Microbrewery is in the process of analyzing its manufacturing overhead costs. Braunhaus Microbrewery is not sure if the number of cases or the number of processing hours is the best cost driver of manufacturing overhead (MOH) costs. The following information is available:

1. Are manufacturing overhead costs fixed, variable, or mixed? Explain.
2. Graph Braunhaus Microbrewery's manufacturing overhead costs against processing hours. Use Excel or graph by hand.
3. Graph Braunhaus Microbrewery's manufacturing overhead costs against cases produced. Use Excel or graph by hand.
4. Does the data appear to be sound, or do you see any potential data problems? Explain.
5. Use the high-low method to determine Braunhaus Microbrewery's manufacturing overhead cost equation using processing hours as the cost driver. Assume that management believes all of the data to be accurate and wants to include all of it in the analysis.
6. Estimate manufacturing overhead costs if Braunhaus Microbrewery incurs 550 processing hours in July.

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MOH Cost MOH Manufacturing Direct per Cost Overhead Labor Units DL per Unit Month Costs Hours Produced Hour Produced July $460,475 23,000 3,600 $20.02 $127.91 August 515,280 26,400 4,320 19.52 119.28 September 419,010 18,800 4,200 22.29 99.76 October 447,970 21,600 3,400 20.74 131.76 November 543,470 28,600 5,750 19.00 94.52 December 437,020 19,400 3,250 22.53 134.47