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978-1-62131-102-7

High-Low Cost Estimation and Simple Regression Analysis Assume we have the following observations relating to overhead costs and direct labor hours for Department A of the ABC Company 3-27 Direct Labor Hours 15 20 14 13 18 15 12 16 18 19 Overhead Costs 40 50 35 30 36 31 41 42 45
TING FOR MANAGERIAL PLANNING, DECISION MAKING, AND CON KING, AND CONTROL Required there (1) Determine the budgeted overhead costs for Department A in a month when are 13 direct labor hours if the high-low method of estimating co is used. (2) Using regression analysis determine what the budgeted overhead month when Department A should work 13 direct labor hours. cost should be in a (3) Does the regression line in (2) explain the data well? Wh y? (4) What is the range within which 95 percent of the observations shou
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Sorted Direct Labor Overhead Hours 12 13 14 15 15 16 18 18 19 20 Costs 31 30 35 40 36 41 42 50(1 High low method determines the variable cost by subtracting Cost of Low from High and dividing the difference from differe2) SUMMARY OUTPUT Regression Statistics Multiple R 0.962582947 R Square 0.92656593 Adjusted R 0.917386672 Square Standard 1828912758 Error Observations 10 ANOVA df MS 337640625 3376406 100.9413 8.19637E-06 26.759375 3.344922 364.4 Residual Total Coefficients | Standard | t Stat | P-value | Lower 95% | Upper 95% | Lower 95 Error 3.703266084 0.7155850.494601-5.889746903 11.1897469-5.889746 0.228614095 10.04695 8.2E-06 1769689952 2824060048 1.7696899 Intercept 265 X Variable 1 2296875 EquationYa + bx Y = 265 + 2296875X For 13 DLH Y 265 2296875 (13) 32.509375(3) | Yes, since its R square value is 092656593 that shows the model is perfect enough, its range from 0 to 1 with 1 p terriThank you!

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