Identifying the Parts of the Cost Formula; Calculating Monthly, Quarterly, and Yearly Costs Using a Cost Formula Based on Monthly Data

Gordon Company's controller, Eric Junior, estimated the following formula, based on monthly data, for overhead cost:

Overhead Cost = $317,000 + ($86 x Direct Labor Hours)

Required:

Overhead cost	Dependent variable
$317,000	Fixed cost (intercept)
$86	Variable rate (slope)
Direct labor hours	Independent variable

Answer the following 3 questions!

2. If next month's budgeted direct labor hours equal 8,000, what is the budgeted overhead cost?

3. If next quarter's budgeted direct labor hours equal 40,000, what is the budgeted overhead cost?

4. If next year's budgeted direct labor hours equal 200,000, what is the budgeted overhead cost?