Chapter 5 Demonstration Problems Page 1 Please Send Comments and Corrections to me at [email protected] Demo 5-1 Harrison Company has accumulated the following total Manufacturing Overhead costs for two levels of activity (within the Relevant Range): Low High Activity (Direct Labor Hours) 80,000 120,000 Total Manufacturing Overhead $468,000 $604,000 Using the High-Low Method of cost analysis, determine the cost formula for Harrison Company. Demo 5-2 Adams Company has accumulated the following total Manufacturing Overhead costs for two levels of activity (within the Relevant Range): Low High Activity (Direct Labor Hours) 30,000 50,000 Total Manufacturing Overhead $270,000 $362,000 Using the High-Low Method of cost analysis, determine the cost formula for Adams Company. Demo 5-3 General Corp. is planning its budget for next year. Its accountant is trying to develop a formula for General Corp.'s travel costs. For the past year, the travel bills were as set forth below. Using the High-Low Method, give the formula for travel costs. Month Cost Mileage January $1,100 560 February 2,000 750 March 1,500 732 April 1,400 560 May 1,300 520 June 1,400 530 July 1,500 542 August 800 200 September 1,700 450 October 1,500 400 November 1,300 300 December 1,000 250Chapter 5 Demonstration Problems Page 2 Please Send Comments and Corrections to me at [email protected] Demo 5-4 Brandie Corp. used Regression analysis to predict the annual cost of Manufacturing Overhead. The results were as follows: Manufacturing Overhead Cost Explained by Units Produced Constant 8,320 Standard Error of Y Estimate 1,050 R-Squared 0.9282 No. of Observations 15 Degrees of Freedom 13 X Coefficient 4.25 Standard Error of Coefficients .4456 What is the linear cost function indicated by the Regression analysis? What is the Goodness Of The Fit of this model? What is the cost to make three
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