5. The variable overhead rate per machine hour in a flexible budget formula. (Hint separate the overhead costs from direct material and direct labor, and then use the high-low method to estimate cost behavior.) The standard fixed overhead rate per machine hour used for product costing 7 The variable overhead spending variance (Assume management has determined that the actual fixed overhead cost of the year amounted to $648,000) B. The variable overhead efficiency variance. 9. The fixed overhead budget variance. 10. The fixed overhead volume variance. (Make the same assumption as in required 7) Problem 3: (25 points) Rico Consequa, the director of Cost Operations of Micro Devices, wishes to develop an accurate cost function to explain and predict support costs in the company's printed circuit board assembly operation. Mr. Consequa is concerned that the cost function that he currently uses-based on direct labor costs-is not accurate enough for proper planning and control of support costs. Mr. Consequa directed one of his financial analysts to obtain a random sample of 25 weeks of support costs and three possible cost drivers in the circuit-board assembly department: direct labor hours, number of boards assembled and average cycle time of board assembled. (Average cycle time is the average time between start and certified completion - after quality testing - of boards assembly during a week.) Much of the effort in this assembly operation is devoted to testing for quality and reworking defective boards, all of which increase the average cycle time in any period. Therefore, Mr. Consequa believes that average cycle time will be the best support cost driver. Mr. Consequa wants his analyst to use HI-Lo analysis to demonstrate which cost driver best explains support costs Circuit Board Number of Assembly Direct Labor Boards Average Cycle Week Support Cost Hours Completed Time (Hours) $66,402 7,619 2,983 186.44 56,943 7,678 2,830 193.14 60,337 7,816 2,413 151.13 50,096 7,659 2,221 HOURWN. 138.30 64,241 7,646 2,701 158.63 60,846 7,765 2,656 148.71 43,119 7,685 2,495 105.85 63,412 7,962 2, 128 174.02 59,283 7,793 2, 127 155.30 60,070 7,732 2,127 162.20 53,345 7,771 2.338 142.97 65,027 7,842 2.685 176.08 58,220 7,940 2.602 150.19 65,406 7,750 2.029 194.06 35,268 7,954 2,136 100.51 46,394 7,768 2,046 137.47 71,877 7,764 2,786 197.44 61,903 7,635 2,822 164.69 50,009 7,849 2,178 141.95 49,327 7,869 2,244 123.37 44,703 7,576 2.195 128.25 22 45,582 7,557 2,370 106.16 23 43,818 7,569 2,046 131.41 24 62, 122 7,672 2,515 154.88 52,403 7.653 2.942 140.07 Required: 1. Using HI-LO method to determine cost behaviors using each of the three cost drivers given. (three cost behaviors are required to be determined with the two decimal point basis) 2. According to the criteria of plausibility and reliability, which among the three cost behaviors determined in required 1 is the best cost driver for predicting costs in the circuit board assembly department? Why