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76. An organization's accountant is estimating next period's total overhead costs. She performed two regression analyses, one based on direct labour hours and the other
76. An organization's accountant is estimating next period's total overhead costs. She performed two regression analyses, one based on direct labour hours and the other based upon machine hours. The results were: Total overhead $150,000+ $4 x direct labour hours Adjusted R-square- 0.65 Total overhead $130,000 + $5 x machine hours Adjusted R-square 0.77 For the next period, the accountant anticipates using 28,000 direct labour hours and 26,000 machine hours. Based upon this information, what is the best estimate for overhead for the next a) $262,000 b) $260,000 )$254,000 d) $270,000 Answer: b Difficulty: Easy Learning Objective: Apply cost estimation techniques to determine the future costs. CPA: Management Accounting/Problem-Solving and Decision-Making Bloomcode: Application
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