Least-squares regression method Using the data in P4-2 and Microsoft Excel: 1. Separat...

Least-squares regression method

Using the data in P4-2 and Microsoft Excel:

1. Separate the variable and fixed elements.

2. Determine the cost to be charged to the product for the year.

3. Determine the cost to be charged to factory overhead for the year.

4. Determine the plotted data points using Chart Wizard.

5. How do these solutions compare to the solutions in P4-2 and P4-3?

Reference: P4-3

Scattergraph method

Using the data in P4-2 and a piece of graph paper:

1. Plot the data points on the graph and draw a line by visual inspection, indicating the trend shown by the data points.

2. Determine the variable cost per unit and the total fixed cost from the information on the graph.

3. Determine the cost to be charged to the product for the year.

4. Determine the cost to be charged to factory overhead for the year.

5. Do these answers agree with the answers to P4-2? Why or why not?

Reference: P4-2

Variable and fixed cost analysis; high-low method

Blattner Co. manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired temperature. The process requires a constant level of heat, so the furnaces are maintained at a set temperature for 24 hours a day. Although units are not continuously processed, management desires that the variable cost be charged directly to the product and the fixed cost to the factory overhead. The following data have been collected for the year:

Required:

1. Separate the variable and fixed elements, using the high-low method.

2. Determine the cost to be charged to the product for the year. (Hint: First determine the number of annual units produced.)

3. Determine the cost to be charged to factory overhead for the year.