Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Balcom Enterprises is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 21,500 units for the first

Balcom Enterprises is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 21,500 units for the first year of production are:

  • Direct materials $1,139,500.
  • Direct labor $731,000 (based on $17 per hour 43,000 hours).

Although overhead has not be estimated for the new product, monthly data for Balcom's total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows:

Dependent variable Factory overhead costs
Independent variable Direct labor hours
Intercept $ 123,000
Coefficient on independent variable $ 4.00
Coefficient of correlation 0.920
R2 0.820

Based on this information, what is the total overhead cost for an estimated activity level of 48,000 direct labor-hours?

Multiple Choice

A) $492,000

B) $128,000

C) $192,000

D) $315,000

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

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

3rd Edition

9780078025525, 9780077517359, 77517350, 978-0077398194

More Books

Students also viewed these Accounting questions

Question

Discuss two arguments for and against advertising.

Answered: 1 week ago

Question

To establish a nondiscriminatory work environment. AppendixLO1

Answered: 1 week ago