High-Low Cost Estimation and Simple Regression Analysis Assume we have the following observations relating to overhead costs and direct labor hours for Department A of the ABC Company.

(1) Determine the budgeted overhead costs for Department A in a month when there are 13 direct labor hours if the high-low method of estimating cost behavior patterns is used.
(2) Using regression analysis determine what the budgeted overhead cost should be in a month when Department A should work 13 direct labor hours.
(3) Does the regression line in (2) explain the data well? Why?
(4) What is the range within which 95 percent of the observations should lie?

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Direct Labor Hours Overhead Costs 15 40 20 50 14 35 13 30 18 44 15 36 12 31 16 41 18 42 19 45