Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3 54,15 Hartman Company's Lucas plant manufactures thermostatic controls, Plant management has experienced fluctuating monthly overhead costs and wants to estimate overhead costs accurately to

image text in transcribed
3 54,15 Hartman Company's Lucas plant manufactures thermostatic controls, Plant management has experienced fluctuating monthly overhead costs and wants to estimate overhead costs accurately to plan its operations and its financial needs. Interviews with plant personnel and studies reported in trade publications suggest that overhead in this industry tends to vary with labor hours. 2.85 Boints A member of the controller's staff proposed that the behavior pattern of these overhead costs be determined to improve cost estimation. Another staff member suggested that a good starting place for determining cost behavior patterns is to analyze historical data. Following this suggestion, monthly data were gathered on labor-hours and overhead costs for the past two years. No major changes in operations occurred over this period of time. The data are shown in the following table. Book Month Labor-Hours Overhead Costs 251,650 $2,741,720 2 238,55 2,375,430 3 193,100 2,400,400 271,550 2,590,870 324,050 3,072.07 6 291,050 2,618,420 References 7 271,550 251,670 2,745,810 9 232,25 2,821,600 10 11 186,050 2,189,590 12 2,550,90 382,90 3,603,970 14 375,550 15 291,040 3,016,75 . 3.638,500 356,670 323,870 19 309,495 3.481,97 20 3,219,770 21 22 336.900 3.207,510 23 24 376,170 3.636.900 4 5 317. Required: a. Use the high low estimation method to estimate the overhead cost behavior fored and variable portions components of cost for the Lucas plant c. Using Excel, compute regression coefficients to describe the overhead cost equation, d. Use the results of your regression analysis to develop an estimate of overhead costs assuming 410.000 labor-hours will be worked next month Complete this question by entering your answers in the tabs below

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Other Assurance Services

Authors: Alvin Arens, James Loebbecke, W Lemon, Ingrid Splettstoesser

9th Canadian Edition

0130091243, 978-0130091246

More Books

Students also viewed these Accounting questions

Question

=+1. Do you have insurance?

Answered: 1 week ago

Question

=+ 2. Do you have a license and do you have insurance?

Answered: 1 week ago