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2. Looking at the regression information, determine which model is the most viable for estimating the total muffin cost. Use your selected best costing
2. Looking at the regression information, determine which model is the most viable for estimating the total muffin cost. Use your selected best costing model to estimate the cost for 10,000 muffins and explain why this analysis is necessary by describing TWO variable costs, TWO fixed costs, and ONE mixed cost (other than utilities; be creative) that Mr. Puffin would incur. 3. Provide Mr. Puffin a recommendation for which allocation method to use to share the MOH and why. Mr. Puffin operates a muffin shop. This shop includes acquiring resources, converting the resources to muffins, and then selling the muffins. Mr. Puffin has various equipment as well as workers that assist in the operations. Mr. Puffin produces the muffins in a factory, but also has a corporate office as well. Mr. Puffin is trying to estimate his total costs based on historical values, so he can make his budgets for the year. He typically uses a High-Low analysis. However, he just hired an intern from the Kelley School of Business who is well equipped to run and interpret regression output. Mr. Puffin would like to know the expected cost of 10,000 muffins. Mr. Puffin is also trying to determine which method should be used to allocate MOH costs. Three methods are being considered: direct labor hours, number of muffins, or ovens. The total MOH for the period is $500,000. The predetermined overhead rate for direct labor hour is $10/DLH, the rate for number of muffins is $5/muffin, and the rate for ovens is $500/oven. Orange Cranberry Direct labor hours # of muffins Ovens Chocolate Chip 25,000 40,000 70 Blueberry 10,000 15,000 32,500 27,500 230 700
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