Question
The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period: Machine-Hours Manufacturing Overhead Jan. 5,200 :
The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period: Machine-Hours Manufacturing Overhead Jan. 5,200 : 300,000 Feb. 3,200 : 224,000 Mar. 4,900 : 263,800 Apr. 2,800 : 190,000 a. Use the high-low method to determine the variable element of manufacturing overhead costs per machine-hour. b. Use the high-low method to determine the fixed element of monthly overhead cost. c. Bursa expects machine-hours in May to equal 5,300. Use the cost relationships determined in part a to forecast May's manufacturing overhead costs. d. Suppose Bursa had used the cost relationships determined in part a to estimate the total manufacturing overhead expected for the months of February and March. By what amounts would Bursa have over- or underestimated these costs?
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