Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Landis Company uses a job-order costing system with a predetermined plantwide overhead rate based on direct labor-hours. In an effort to improve its ability to

image text in transcribed
image text in transcribed
Landis Company uses a job-order costing system with a predetermined plantwide overhead rate based on direct labor-hours. In an effort to improve its ability to measure job profitability and make decisions, the company is considering allocating some of its overhead costs, such as electrical costs, based on machine-hours instead of direct labor-hours. To further explore the potential benefits of this approach, the company has gathered the following eight weeks of actual (not estimated) data with respect to its electrical costs: Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Total Machine-Hours 7,700 8,900 8,600 8,100 7,600 7,100 5,500 6,800 60,300 Direct Labor- Hours 8,910 8,920 8,870 8,840 8,990 8,940 8,870 8,910 71,250 Electrical Costs $ 76,200 83,800 81,000 80,800 79,400 70,700 61,500 73,900 $607,300 Using the data above, the company translated these actual amounts into annual estimates as follows: Machine-Hours 60,300 6.5 391,950 Total for eight weeks (a) 52 weeks + 8 weeks (b) Annual estimate (a) x (b) Direct Labor- Hours 71,250 6.5 463, 125 Electrical Costs $ 607,300 6.5 $3,947, 450 Click here to download the Excel.template, which you will use to answer Requirements 4.5 and 6. Click here for a brief tutorial on Regression Analysis in Excel. 5. Refer to the eight weeks of actual data included in the Excel template. a. Use least-squares regression to estimate the fixed electrical cost per week and the variable electrical cos machine-hour. (You can refer to Appendix 5A of the text for a brief illustration of the method being used to perform the regression computations.) b. What is the R2 for the regression line in requirement 5a

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Decision Makers

Authors: Mark DeFond

2nd Edition

1618533142, 9781618533142

More Books

Students also viewed these Accounting questions

Question

Contrast the three traditional organizational designs.

Answered: 1 week ago

Question

What should Belindas and Marcus next steps be?

Answered: 1 week ago