Predict overhead costs using direct labour hours

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Reference no: EM132585842

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 hour   overhead cost

1

474

52.720

2

471

53.015

3

399

$2.458

4

487

52.947

5

511

52.764

6

418

52.597

Question1 : For April of the coming year, XYZ expects 3,161 direct labour hours and 641 machine hours. Predict overhead costs using

(1) direct labour hours. (Round answer to 0 decimal place, e.g. 1,525.)

(2) machine hours. (Round answer to 0 decimal place, e.g. 1,525.)

Reference no: EM132585842

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