1. Cerberus Ltd. manufactures a variety of pet supplies. The first year of operations has been completed, and the manager of the manufacturing division is questioning whether the allocation based used for applying manufacturing overhead to each product was the most appropriate. The following information has been gathered for 2021: Month January February March April May June July August September October November December Total costs 42,200 40.940 43,700 42.280 41.500 41,000 41,050 40.900 41,100 42,400 42,060 41,226 Machine hours 3,968 3,584 4,092 3,900 3,720 3,780 3,673 3,660 3,712 3,816 3,840 3,539 Direct labour hours 505 470 510 480 495 480 500 500 480 510 480 500 Total costs and machine hours 44000 43000 42000 41000 40000 3500 3600 3700 3800 3900 4000 4100 4200 Total costs and direct labour hours 44000 43500 43000 42500 42000 41500 41000 40500 460 470 480 490 500 510 520 In addition, a regression analysis has been carried out and the following information resulted: R Direct labour hours Machine hours 0.219177 0.770874 Intercept 27,415.02 24,094.90 X variable 28.99759 4.664278 Required: Heading 1 a) Based on the results of the regression analysis prowned above, should direct labour hours or machine hours be used as the allocation base for allocating the manufacturing overhead? Explain how you reached your conclusion. b) Use the high-low method to calculated the fixed and variable components of the total manufacturing overhead for the allocation base you selected in part a). What is the benefit from having graphs available for the data points? c) Compare the fixed and variable components derived using the high-low method to the amounts obtained using regression analysis. Which is the more accurate? Why? Are the numbers calculated using this method exact? Explain./ 1. Cerberus Ltd. manufactures a variety of pet supplies. The first year of operations has been completed, and the manager of the manufacturing division is questioning whether the allocation based used for applying manufacturing overhead to each product was the most appropriate. The following information has been gathered for 2021: Month January February March April May June July August September October November December Total costs 42,200 40.940 43,700 42.280 41.500 41,000 41,050 40.900 41,100 42,400 42,060 41,226 Machine hours 3,968 3,584 4,092 3,900 3,720 3,780 3,673 3,660 3,712 3,816 3,840 3,539 Direct labour hours 505 470 510 480 495 480 500 500 480 510 480 500 Total costs and machine hours 44000 43000 42000 41000 40000 3500 3600 3700 3800 3900 4000 4100 4200 Total costs and direct labour hours 44000 43500 43000 42500 42000 41500 41000 40500 460 470 480 490 500 510 520 In addition, a regression analysis has been carried out and the following information resulted: R Direct labour hours Machine hours 0.219177 0.770874 Intercept 27,415.02 24,094.90 X variable 28.99759 4.664278 Required: Heading 1 a) Based on the results of the regression analysis prowned above, should direct labour hours or machine hours be used as the allocation base for allocating the manufacturing overhead? Explain how you reached your conclusion. b) Use the high-low method to calculated the fixed and variable components of the total manufacturing overhead for the allocation base you selected in part a). What is the benefit from having graphs available for the data points? c) Compare the fixed and variable components derived using the high-low method to the amounts obtained using regression analysis. Which is the more accurate? Why? Are the numbers calculated using this method exact? Explain./