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Problem 5-53 High-Low Method, Scattergraph (LO 5-4) Academy Products manufactures a variety of custom components for use in aircraft navigation and communications systems. The controller
Problem 5-53 High-Low Method, Scattergraph (LO 5-4) Academy Products manufactures a variety of custom components for use in aircraft navigation and communications systems. The controller has asked for your help in estimating fixed and variable overhead costs for Academy's Rio Puerco plant. The controller tells you that the best cost driver for estimating overhead is machine-hours. Monthly data on machine-hours and overhead costs for the last year have been collected and are shown below: Month Machine-Hours 710,000 980,000 805,000 745,000 1,075,000 880,000 790,000 855,000 1,015,000 720,000 755,000 780,000 Overhead Costs $ 714,000 2,250,000 1,300,000 860,000 3,780,000 1,480,000 1,180,000 1,580,000 2,580,000 920,000 1,060,000 990,000 11 12 Required: a. Estimate the monthly fixed costs and the unit variable cost per machine-hour using the high-low estimation method. (Round variable cost per unit to 1 decimal place.) Overhead costs = per MH > Machine hour b. Draw a scattergraph relating overhead costs to the number of machine-hours. Instructions: 1. On the graph below, use the point tool to plot the point corresponding to the machine-hours and relating overhead costs (Month 1). 2. Repeat the process for the remainder of the sample (Month 2 Month 3, ...). 3. To enter exact coordinates, double click on the point and enter the exact co-ordinates of x and y. High-Low Method, Scattergraph Academy Products Worth 1 Worth 2 3690DCO- 3100000 Martha Worth 4 Overhead Costs Wonths 110000.- Worth 500003 5000000000000000002966058000 Machine Hours reset
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