McKnight Industries is in the process of analyzing its manufacturing overhead costs. McKnight Industries is not sure if the number of units produced or number of direct labour hours is the best cost driver to use for predicting manufacturing overhead costs.

1. Use Excel regression analysis to determine Mcknight Industries' manufacturing overhead cost equation using DL hours as the cost driver. Comment on the R-square. Estimate MOH costs if Mcknight Industries incurs 26,100 DL hours in January 2. Use Excel regression analysis to determine McKnight's MOH cost equation using number of units produced as the cost driver. Use all of the data provided. Project total MOH costs if McKnight Industries produces 5,000 units. Which cost equation is better this one or the one from Question 17 Why? 3. Use Excel regression analysis to determine McKnight Industries' MOH cost equation using number of units produced as the cost driver. This time, remove any potential outliers before performing the regression. How does this affect the R-square? Project total MOH costs if 5,000 units are produced 4. In which cost equation do you have the most confidence? Why? Manufacturing Overhead Direct Labour Hours Month Costs 463,000 23,100 513,000 26,500 July .......... $ August ........ September ..... October ....... November .... Cost per cost per Units DL Unit Produced Hour Produced 3,620 $ 20.04 $ 127.90 4,300 19.36 119.30 4,230 21.75 102.84 3,380 21.03 133.14 5,790 18.73 97.06 3,300 21.37 132.73 435,000 20,000 450,000 562,000 438,000 21,400 30,000 20,500 December