Question

Observation Month Known X Known Y Overhead Cost Production Units $250,000.00 34000 $184,000.00 26000 $165,000.00 21000 $178,000.00 24000 $192,000.00 28000 $225,000.00 32000 $210,000.00 29000 $230,000.00 30000 $195,000.00 29000 $224,000.00 31000 $200,000.00 30000 12 $240,000.00 33000 Result Using Regression Using Lines 7.35 % 7.08 % 7.86 % 7.42 % 6.86 % 7.03 % 7.24 % 7.67 % 6.72 % 7.23 % 6.67 % 7.27 % High $250,000.00 $165,000.00 $34,000.00 $21,000.00 Low

Determine whether the High-Low method or Regression Analysis is better to predict monthly overhead costs. Explain which model is the better? Why or why not?

Use absolute cell address in y = a + bX formula (Use absolute August X Value) to predict January and December overhead costs. Do you think these predicted overhead costs are reasonable?