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: Slope = $ 41.27 Intercept = $ 596.36 Correlation coefficient = .934 What is the estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period? (rounded to the nearest whole dollar)

Answer 1

The estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period is $9,882.11

Step-by-step explanation:

In order to calculate the estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period we would have to make the following calculation:

Cost for 225 direct labor hours = Intercept + Slope*225

Cost for 225 direct labor hours=$596.36+ ($41.27*225)

Cost for 225 direct labor hours=$9,882.11

The estimated overhead cost if 225 direct labor hours are expected to be used in the upcoming period is $9,882.11