5. Cuni Culara would like to predict their total monthly overhead cost based on machine hours (MH) used. Data for the last 24 months is in the spreadsheet.

Required:

1. Use this data to prepare cost formulas using a) the high-low method, and b) regression analysis. Show the cost formula from each calculation in the form:

Overhead = Fixed cost + MH*(Variable OH per unit)

1. Assume that Cuni Culara decides to use the cost formula from the regression analysis. Briefly explain in your own words how using this predictive formula might mislead the company over the next year.

MHOH77.5563.811.83155.8352.742.35574.0113.627.32760.3422.973.51572.3483.538.30052.5192.554.34462.5543.076.07550.4222.478.03267.6073.310.58172.8193.570.21065.3393.189.23351.6832.526.33879.0363.871.99378.4673.829.67052.6482.596.04963.5423.099.98153.1232.609.75357.9042.847.29859.0532.900.80051.5312.525.62175.8623.722.94271.1153.503.17559.3792.889.57451.9712.537.898