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cost using the cost formula in requirement a? (Note. a cost P6-6A. Least Squares Regression Analysis The management of Digger Inc., is trying to
cost using the cost formula in requirement a? (Note. a cost P6-6A. Least Squares Regression Analysis The management of Digger Inc., is trying to develop a formula for its major manufacturing overhead activities. Digger's manufacturing process is highly au- tomated and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed. The costs must be separated into their fixed and variable components so that the cost behavior of the power usage activity can be better understood. Analysts have determined that machine hours drive power usage; thus machine hours are the cost driver for power costs. Nine months of data have been collected and are presented in the chart below: Machine Hours Power Cost Period January. 24,000 $32,500 February 30,000 47,500 March 36,000 53,125 April 26,400 46,250 May. 25,200 42,500 June 21,600 36,250 July. 28,800 45,000 August 33,600 50,000 September 31,200 40,000 Note: For the following requirements, round the variable cost per unit to the nearest cent and the total fixed cost to the nearest dollar. Required a. Use the high and low points to estimate a power cost formula.
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