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AKB21 Company would like to examine how overhead costs behave with changes in labour hours: Month Total Overhead Costs Labour Hours March $45,000 2,000 April
AKB21 Company would like to examine how overhead costs behave with changes in labour hours: Month Total Overhead Costs Labour Hours March $45,000 2,000 April 65,000 3,500 May 1,500 55,000 60,000 June 3,500 55,000 1,000 65,000 2,000 45,000 1,250 July August September October November December 80,000 4,000 2,500 55,000 60,000 2,300 Required: a) Using high-low method to measure the overhead cost behaviour of AKB21. (13 marks) (6 marks) b) What is the strength and weakness of using high-low method to measure cost behaviour? c) Why is regression analysis usually preferred to the high-low method? (6 marks) (Total 25 marks)
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