Michael Corporation's managers in the stamping department have been studying the overhead cost and the relationship with machine hours. The following are data from the most recent 12 months. Month Overhead Machine hours January 5,030 2,730 February 1,600 600 March 7,210 3,403 April 4,560 2,200 May 6,880 3,411 June 6,520 2,586 July 6,230 3,364 August 5,570 2,411 September 7,728 3,960 October 5,810 2,897 November 4,580 2,207 December 6,010 2,864
Michael Corporation's managers in the stamping department have been studying the overhead cost and the relationship with machine hours. The following are data from the most recent 12 months.
|
Month |
Overhead |
Machine hours |
|
January |
5,030 |
2,730 |
|
February |
1,600 |
600 |
|
March |
7,210 |
3,403 |
|
April |
4,560 |
2,200 |
|
May |
6,880 |
3,411 |
|
June |
6,520 |
2,586 |
|
July |
6,230 |
3,364 |
|
August |
5,570 |
2,411 |
|
September |
7,728 |
3,960 |
|
October |
5,810 |
2,897 |
|
November |
4,580 |
2,207 |
|
December |
6,010 |
2,864 |
The manager of the department has requested a regression analysis of these two variables. The staff person performing the analysis decided to exclude February. She observed the volume of activity was very low for that month because of two factors: a severe flue outbreak and an electrical fire that disrupted operations for about 10 working days.
- Using the least square (regression) analysis, compute the fixed cost.
- Using the least square (regression) analysis, how much are the estimated
overheads for 3,000 machine hours?
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