Managerial Accounting Assignments Analyzing & Predicting Cost Behaviors This assignment is worth 40 points, and will be due on Friday, April 24, 2020 During 2019, Better Production Co. recorded the following Manufacturing Overhead costs Month January February March April May June July August September October November December Units Produced 360.000 364.000 372.000 368,000 375.000 379,000 384.000 387,000 391,000 396,000 402,000 403,000 Indirect Materials 263.100 264,900 267.800 271,300 274,500 272,700 278,000 281,400 279.900 286,300 288,600 292,200 S S S $ $ S $ 5 $ $ $ $ Indirect Utilities Gas & Electric 687,200 $ 52.200 697,900 $ 51,300 706,100 $ 50,700 703,600 $ 49,100 714,800 5 49,300 718,500 $ 48.500 729,400 5 49,400 736,700 $ 50,100 742,300 $ 51.400 751,900 $ 52,600 763.8005 54,800 765,100 $ 56,400 Building Depreciation $ 44.000 $ 44.000 $ 44,000 $ 44,000 $ 44,000 5 44,000 $ 44,000 $ 44,000 $ 44,000 $ 44.000 $ 48.000 $ 48.000 Instructions: Analyze the data using a combination of observation techniques and the Excel template that is provided on-line and demonstrated in class. As you observe the data, consider whether the recorded costs seem to project a variable cost, a fixed cost, or a semi-variable cost. Note that variable and semi-variable costs with a linear cost progression should indicate a high correlation coefficient. If the correlation is not high, you should not assume that the cost is predictable using the formulas generated by the Excel template. Also note the following additional data: The company had to expand their facility when production reached 400,000 units during 2019. No additional expansions are expected until production reaches 480,000 units. Utilities charges include both Gas & Electric usage. The gas usage is primarily for heating the production facility. During 2019, the Gas portion of the electric bill was as follows: January - $6,000, February & December - $5.000, March & November - $4,000. April & October - $2,000, and May & September - $1,000. No gas was used during the months of June, July & August. Mo Better Production expects that gas charges will be up by 20% in 2020, while electric charges will be up by 10%. Please note: you are strongly encouraged to separate the gas and electric costs to see if the cost behaviors become more predictable. It is expected that Indirect Materials costs will be unchanged, but Indirect Labor will cost 5% more than in 2019, After analyzing the data, describe the nature of each cost, and provide a model (either an algebraic formula ora predicted value with a description of the expected changes) for predicting 2020 values for each overhead cost. Based upon these analyses, predict the 2020 overhead cost for each type of manufacturing overhead cost, and the total manufacturing overhead budget, assuming each of the following monthly production levels: 408.000 units for January 1 412,000 units for February 456,000 units for October Asuming further that 1.5 hours of direct labor will be used to produce each unit, what would be the predetermined overhead rate, based upon direct labor hours, for each of the 3 months indicated above? Managerial Accounting Assignments Analyzing & Predicting Cost Behaviors This assignment is worth 40 points, and will be due on Friday, April 24, 2020 During 2019, Better Production Co. recorded the following Manufacturing Overhead costs Month January February March April May June July August September October November December Units Produced 360.000 364.000 372.000 368,000 375.000 379,000 384.000 387,000 391,000 396,000 402,000 403,000 Indirect Materials 263.100 264,900 267.800 271,300 274,500 272,700 278,000 281,400 279.900 286,300 288,600 292,200 S S S $ $ S $ 5 $ $ $ $ Indirect Utilities Gas & Electric 687,200 $ 52.200 697,900 $ 51,300 706,100 $ 50,700 703,600 $ 49,100 714,800 5 49,300 718,500 $ 48.500 729,400 5 49,400 736,700 $ 50,100 742,300 $ 51.400 751,900 $ 52,600 763.8005 54,800 765,100 $ 56,400 Building Depreciation $ 44.000 $ 44.000 $ 44,000 $ 44,000 $ 44,000 5 44,000 $ 44,000 $ 44,000 $ 44,000 $ 44.000 $ 48.000 $ 48.000 Instructions: Analyze the data using a combination of observation techniques and the Excel template that is provided on-line and demonstrated in class. As you observe the data, consider whether the recorded costs seem to project a variable cost, a fixed cost, or a semi-variable cost. Note that variable and semi-variable costs with a linear cost progression should indicate a high correlation coefficient. If the correlation is not high, you should not assume that the cost is predictable using the formulas generated by the Excel template. Also note the following additional data: The company had to expand their facility when production reached 400,000 units during 2019. No additional expansions are expected until production reaches 480,000 units. Utilities charges include both Gas & Electric usage. The gas usage is primarily for heating the production facility. During 2019, the Gas portion of the electric bill was as follows: January - $6,000, February & December - $5.000, March & November - $4,000. April & October - $2,000, and May & September - $1,000. No gas was used during the months of June, July & August. Mo Better Production expects that gas charges will be up by 20% in 2020, while electric charges will be up by 10%. Please note: you are strongly encouraged to separate the gas and electric costs to see if the cost behaviors become more predictable. It is expected that Indirect Materials costs will be unchanged, but Indirect Labor will cost 5% more than in 2019, After analyzing the data, describe the nature of each cost, and provide a model (either an algebraic formula ora predicted value with a description of the expected changes) for predicting 2020 values for each overhead cost. Based upon these analyses, predict the 2020 overhead cost for each type of manufacturing overhead cost, and the total manufacturing overhead budget, assuming each of the following monthly production levels: 408.000 units for January 1 412,000 units for February 456,000 units for October Asuming further that 1.5 hours of direct labor will be used to produce each unit, what would be the predetermined overhead rate, based upon direct labor hours, for each of the 3 months indicated above