Cuni Culara would like to predict their total monthly overhead cost based on machine hours (MH) used. Data for the last 24 months is in the spreadsheet.

Required:

1. Use this data to prepare cost formulas using a) the high-low method, and b) regression analysis. Show the cost formula from each calculation in the form:

Overhead = Fixed cost + MH*(Variable OH per unit)

1. Assume that Cuni Culara decides to use the cost formula from the regression analysis. Briefly explain in your own words how using this predictive formula might mislead the company over the next year.

MH	OH
77,556	3,811,831
55,835	2,742,355
74,011	3,627,327
60,342	2,973,515
72,348	3,538,300
52,519	2,554,344
62,554	3,076,075
50,422	2,478,032
67,607	3,310,581
72,819	3,570,210
65,339	3,189,233
51,683	2,526,338
79,036	3,871,993
78,467	3,829,670
52,648	2,596,049
63,542	3,099,981
53,123	2,609,753
57,904	2,847,298
59,053	2,900,800
51,531	2,525,621
75,862	3,722,942
71,115	3,503,175
59,379	2,889,574
51,971	2,537,898