Reference no: EM13579543

The Ashland Company has been having some difficulties estimating its manufacturing overhead costs. In the past, manufacturing overhead costs have been related to production levels. However, some production managers have indicated that the size of their production lots might also be having an impact on the amount of their monthly manufacturing overhead costs. In order to investigate this possibility, the company collected information on its monthly manufacturing overhead costs, production in units, and average production lot size for 2012. Month Production units Manufacturing Overhead Costs Average Monthly Production Lot Size 1 75,000 925,800 20 2 90,000 843,875 19 3 65,000 910,125 24 4 80,000 946,000 19 5 55,000 879,000 24 6 50,000 825,000 18 7 85,000 960,000 22 8 105,000 1,053,500 25 9 102,000 1,020,000 23 10 68,000 905,000 20 11 75,000 938,000 22 12 95,000 995,000 24 Required: (a) Use the high-low method to estimate next month's manufacturing overhead costs, assuming the company is planning to produce 92,000 units. (b) Use the high-low method to estimate next month's manufacturing overhead costs, assuming the company is planning to run a 21-lot size. Show work