Question

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 453 $2,579 478 $3,073 397 $2,432 490 $2,820 509 $2,800 418 $2,627 au AWN 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 $ 707 Variable Costs 7.91 per mac e Textbook and Media Assistance Used

Answer 1

Answer Page No @ flized code and veniable cool Variable cost a change in cost I change in machine hour high level activity corf -2800 : .= $2800 – $ 2432 low level activité conf=2432 509 - 397 high level activity = 509/ low levelactivil = 3971 $368 = $3.29 per machine hous ... Variable coof - $3.29 per machine hower fixed.conf = $2800 ~ / 509 x $3.29) = 0800 – 1674,61 = !125.39 :fixed cost $1125.39 * $ 1125 fixed cost Variable cosef $1125:39 $3.29 per machine hous

Page No ③ Months overhead coat Months overhead cook = fired.coof + (machine howns incored x veniable cook | machar ..= 1125 + C1046X $3.29) = 1105 + 3441 = $4566 .: Months overhead cosf = $ 4566 O Direct labour bows overhead copt Overhead corob = $1450 per month +(2158 direct dobou 1 hrs x $0.35) = 1450 + 1105 = $2855 1. Direct labown how's overhead coole = $08557 Machine howys overhead cost overhead cost = $11.95 +7 732 machine hos X $3:29) : 1125 + 408 ©

Page.avo ☺ = $3633 P. Machine howers Overhead cost e $3533 ( activ Machine hover The better activitas base =