The cost accountants at the Doering Company regressed total overhead costs and d

Question

The cost accountants at the Doering Company regressed total overhead costs and direct labor hours for the past 30-months and reported the following results:

What is the estimated overhead cost if 204 direct labor hours are expected to be used in the upcoming period? (rounded to the nearest whole dollar)

$8,593.

$10,354.

$8,080.

$8,653.

The cost accountants at the Doering Company regressed total overhead costs and direct labor hours for the past 30-months and reported the following results:

Explanation / Answer

We have following regression equation:

Y=572.37 + 39.61 X

Y= overhead cost

X= labor hours

Plugging X= 204 in the equation, we get:

Y = 572.37 + 39.61 x 204

   = 8653

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