Miller

Industries is in the process of analyzing its manufacturing overhead costs.

Miller

Industries is not sure if the number of units produced or number of direct labor hours is the best cost driver to use for predicting manufacturing overhead costs. The following information is available:

Requirement 1. Use Excel regression analysis to determine Miller Industries' manufacturing overhead cost equation using DL hours as the cost driver. (Round your answers to the nearest cent.)

y = $( ) x + $ ( )

Comment on the R-square.

The R-square is =( )

; therefore projections =( )

should be fairly accurate.

should be used with caution.

should not be used at all.

The estimated manufacturing overhead costs, if 25,900 DL hours are incurred in January, are $ ( ) .

Requirement 2. Use Excel regression analysis to determine

Miller's manufacturing overhead cost equation using number of units produced as the cost driver. (Round your answers to the nearest cent.)

y = $( ) x + $ ( )

The projected total manufacturing overhead costs, if 5,400 units are produced, are $( ).

(Round your answer to the nearest cent.)

Which cost equation is better long dashthis one or the one from Question 1? Why?

The R-square is = ( )

than it was using DL hours as the cost driver. Therefore, the cost equation using DL hours number of units produced is the more accurate cost equation.

Requirement 3. Use Excel regression analysis to determine

Miller Industries' MOH cost equation using number of units produced as the cost driver. This time, remove any potential outliers before performing the regression.

Miller Industries' has identified September as a potential outlier. (Round your answers to the nearest cent.)

y = $( ) x + $ ( )

How does this affect the R-square?

The R-square is =( )

with the potential outlier removed.

The projected total manufacturing overhead costs, if 5,400 units are produced, are $( ) .

(Round your answer to the nearest cent.)

Requirement 4. In which cost equation do you have the most confidence? Why?

We have the most confidence in the cost equation from

Requirement 1

Requirement 3

Requirement 2 .

The R-square value for that equation was the ( ) Enter your answer in each of the answer boxes.

				MOH	MOH
	Manufacturing	Direct		Cost per	Cost per
	Overhead	Labour	Units	DL	Unit
Month	Costs	Hours	Produced	Hour	Produced
July . . . . . . . . . . .	$462,000	22,900	3,610	$20.17	$127.98
August . . . . . . . . .	510,000	26,300	4,330	19.39	117.78
September . . . . . .	401,000	17,500	4,250	22.91	94.35
October . . . . . . . .	445,000	21,700	3,460	20.51	128.61
November . . . . . .	556,000	30,000	5,740	18.53	96.86
December . . . . . .	430,000	19,000	3,230	22.63	133.13