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Cycle Accessories manufacturers cellphone holders that can be mounted on the handle bars of most motorcycles. The manufacturing process is highly automated and management feels
Cycle Accessories manufacturers cellphone holders that can be mounted on the handle bars of most motorcycles. The manufacturing process is highly automated and management feels that machine-hours are likely the main driver of overhead costs. Data from the most recent year are shown below. Month January February March April May June July August September October November December Machine- Hours 2,300 2,360 2,600 3, 320 3,500 4,100 4,700 5,300 5,000 3,500 2,660 4,700 Overhead Costs $ 54,000 55,620 61,600 66, 720 68,960 70, 480 76, 720 77,910 75,440 68,480 63,280 74,720 Required: 1. Using least-squares regression, estimate the fixed cost and variable cost elements of monthly overhead costs. Estimate the fixed cost element to the nearest dollar and the variable cost element to the nearest cent. Fixed cost Variable cost per machine hour 2. If the company expects to use 3,800 machine-hours next month, estimate total overhead costs. Total overhead costs
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