Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of factory overhead. The plant manager, who has just been promoted, would like to understand how overhead costs fluctuate in order to improve planning and budgets. After discussions with both financial and operations members of the plant staff, there is general agreement that the best cost driver for overhead is machine-hours.

Monthly data were collected from the most recent two years on machine-hours and overhead. More months of data were available, but a process change had taken place about 30 months earlier, so the staff believed any data from before that time would be misleading. The data are shown in the following table:

Month	Machine-Hours	Factory Overhead
1	39,600	$ 527,400
2	37,600	416,800
3	30,400	366,100
4	42,700	498,500
5	50,900	591,000
6	45,800	503,700
7	42,700	477,200
8	62,400	707,650
9	36,600	425,600
10	54,000	661,300
11	53,000	617,000
12	36,600	490,800
13	60,200	693,300
14	59,200	655,000
15	45,800	580,300
16	39,600	528,200
17	56,100	683,700
18	50,900	614,000
19	61,200	669,800
20	49,900	619,400
21	54,000	672,400
22	29,400	445,300
23	60,200	692,700
24	59,200	718,800

Required:

Use the high-low estimation method to estimate the overhead cost behavior (fixed and variable components of cost) for the Goulburn plant.

Prepare a scattergraph showing the overhead costs plotted against the machine-hours.

Use a spreadsheet program to compute regression coefficients to describe the overhead cost equation.

Use the results of your regression analysis to develop an estimate of overhead costs assuming 48,000 machine-hours will be worked next month.