Question

Question 14 XYZ Company uses the formula y = a + bX to predict and analyze overhead costs. In the previous year, XYZ used $1,750 per month for the a factor and $0.35 for the b factor in applying overhead. XYZ has used direct labour hours in the past, but is wondering whether overhead behaviour is more closely associated with machine hours. The following data have been generated for consideration: Month Machine Hours Overhead Costs 463 468 402 483 507 418 $2,821 $3,071 $2,399 $2,859 $2,733 $2,723 2 4 5 6 Determine the fixed and variable values, using machine hours. (Round variable cost to 2 decimal places, e.g. 15.25 and fixed cost to O decimal places, e.g. 525). Fixed Cost Variable Cost 10.18 per machine hour LINK TO TEXT If it is expected that the company will incur 1,000 machine hours in the coming month, predict that month's overhead costs. (Round answer to o decimal places, e.g 525) Month's overhead costs LINK TO TEXT

Answer 1

		Machine	overhead
		hours	costs
	High	507	2,733
	low	402	2399
	difference	105	334
	Variable cost		334/105
			3.18	answer
	Fixed cost          = 2733-507*3.18
			1120	answer
b)	Months overhead cost
	1120+1000*3.18
	4300