What is expected factory overhead cost using cost formula

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Reference no: EM13939502

METHOD OF LEAST SQUARES USING COMPUTER SPREADSHEET PROGRAM

The controller for Beckham Company believes that the number of direct labor hours is associated with overhead cost. He collected the following data on the number of direct labor hours and associated factory overhead cost for the months of January through August.

Month	Number of Direct Labor Hours	Overhead Cost ($)
January	689	5,550
February	700	5,590
March	720	5,650
April	690	5,570
May	680	5,570
June	590	5,410
July	750	5,720
August	675	5,608

Required:

1. Using a computer spreadsheet program such as Excel, run a regression on these data. Print out your results.

2. Using your results from Requirement 1, write the cost formula for overhead cost. (You may round the fixed cost to the nearest dollar and the variable rate to the near- est cent.)

3. What is R2 based on your results? Do you think that the number of direct labor hours is a good predictor of factory overhead cost?

4. Assuming that expected September direct labor hours are 700, what is expected factory overhead cost using the cost formula in Requirement 2?

Reference no: EM13939502

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