Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please show working as it is excel based Louw Number H a 3 A1 fa Waverley Welding Company provides welding services for a variety of
please show working as it is excel based
Louw Number H a 3 A1 fa Waverley Welding Company provides welding services for a variety of industrial customers in the manufacturing, aerc D F G K The table below shows data for the most recent fiscal year. Management believes that either the mumber of jobs completed each month or the number of direct labour bours incurred each month could be used as the activity base. However, they are not sure which is more appropriate 2 Overhead includes costs such as the maintenance supervisor's salary, depreciation on the welling equipment, and indirect materials used on each job. Electricity costs are also included in overhead and are significant since welding equipment consumnes a relatively high amount of energy. Waverley Welding, also employs a mix of experienced and inexperienced welders. Experienced welders are paid a higher hourly wage but are more efficient and tend to incur less wastage of indirect materials. Inexperienced welders are of course paid less on a per hour basis but work more slowly and use more indirect materials Direct Labour Overhead Month Jobs Hours Cost 5 January 500 4,879 $ 75,143 6 February 350 3,548 $ 69.491 7 March 400 3,990 $ 71993 8 April 5,466 $ 81.217 9 May 200 1,914 $ 60,162 10 June 250 3.157 $ 68,364 11 July 500 5,000 $ 78,351 12 August 600 6,114 S 81,582 13 September 500 5,108 $77,691 14 October 350 3,624 s 68, 355 15 November 400 3.900 S 69 886 16 December 510 5,700 $ 83,434 17 4 550 18 Required 19 20 (a) Use Linear Regression to determine the cost formula for overhead cost assuming jobs produced is the activity base. Calculate the R-squared (Goodness of fit) 21 22 23 overhead cost = + per job 24 R? 25 26 27 (6) Use Linear Regression to determine the cost formula for overhead cost assuming direct labour hours is the activity base Calculate the R-squared (Goodness of fit) 28 29 30 Overhead cost = per Direct Labour hour 31 R? 32 33 (0) 34 Based on your answers in parts (a) and (b), which is the most appropriate cost driver for overhead costs? 35 Briefly explain why? 36 37 38 Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started