Question
Flexible Budget The controller for Muir Company's Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided
Flexible Budget
The controller for Muir Company's Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided to concentrate on the past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on overhead costs, number of machine hours, number of setups, and number of purchase orders are in the following table.
Month | Overhead Costs | Machine Hours | Number of Setups | Number of Purchase Orders |
January | $ 32,296 | 1,000 | 20 | 216 |
February | 31,550 | 930 | 18 | 250 |
March | 36,280 | 1,100 | 21 | 300 |
April | 36,867 | 1,050 | 23 | 270 |
May | 36,790 | 1,170 | 22 | 285 |
June | 37,800 | 1,200 | 25 | 240 |
July | 40,024 | 1,235 | 27 | 237 |
August | 39,256 | 1,190 | 24 | 303 |
September | 33,800 | 1,070 | 20 | 255 |
October | 33,779 | 1,210 | 22 | 195 |
November | 37,225 | 1,207 | 23 | 270 |
December | 27,500 | 1,084 | 15 | 150 |
Totals | $423,167 | 13,446 | 260 | 2,971 |
Required:
Question Content Area
1. Calculate an overhead rate based on machine hours using the total overhead cost and total machine hours. (Round the overhead rate to the nearest cent and predicted overhead to the nearest dollar.) Use this rate to predict overhead for each of the 12 months.
Overhead rate: $fill in the blank _______ per machine hour
Question Content Area
Prepare a flexible budget for overhead for the 12 months. If there is no variance, enter "0" for the amount and select "NA" in the last column. Enter all amounts as postive values.
Muir Company Flexible Budget for Overhead 2. Run a regression equation using only machine hours as the independent variable. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the intercept and x-coefficient to the nearest cent and predicted overhead amount to the nearest dollar.) If there is no variance, enter "0" for the amount and select "NA" in the last column. Enter all your answers as positive amounts. Muir Company Flexible Budget for Overhead
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