Standard cost Manufacture Overhead

The production manager is unsure as to how to go about estimating manufacturing overheads but has compiled the following data relating to prior periods.

Month Manufacture Overhead Cost

1 $176,890

2 183,500

3 131,250

4 280,000

5 305,600

6 317,550

7 407,500

8 295,000

9 475,700

10 367,400

11 435,000

12 267,800

13 285,000

14 170,000

Direct Labour Hours

20,000 21,000 30,000 27,000 27,000 30,000 25,000 24,000 29,000 30,000 26,000 30,500 26,000 13,000

Use regression analysis to derive a cost function for manufacturing overhead cost. Manufacturing overheads are paid in the month incurred. Included in the monthly manufacturing overhead costs is $15,000 depreciation for property, plant and equipment.

Manufacture overhead budget. Round off variable cost to 2 decimal places and fixed cost to the nearest whole number. Show regression computation.