Cost Behavior – Additional Problems Mendoza MV

Items 1 to 2. Well Corporation uses least-squares regression to analyze a variety of

operating costs. A staff assistant determined that monthly machine hours (MH) have a
strong cause-and-effect relationship with total maintenance costs, and generated the
following statistics:

Intercept: P170,000
b coefficient: P3.80
Total machine hours for the year: 36,500

Required:
1. Construct the company's regression equation.
2. Predict the company's maintenance cost in a month when 3,200 machine hours are
worked. 

1. Y = 170,000 +3.80 MH
2. Y = 182,160

3 and 4. Care Company reports the following data for the first six months of the year:
Machine Electrical
Month Hours Cost
January 400 P40
February 300 P30
March 400 P50
April 300 P40
May 200 P30
June 200 P20

3. Using the least-squares regression method, determine the cost-predicting

equation.
4. Construct a scatter graph for Care Co. Compute the estimated variable cost per
machine hour and the amount of monthly fixed costs.

3.Y = 5 + 0.10x
4.5 total FC

5 and 6. The controller of John Co has requested a quick estimate of the manufacturing
supplies needed for the Luzon Plant for the month of June when production is expected
to be 470,000 units to meet the ending inventory requirements and sales of 475,000
units. John Co's budget analyst has the following actual data for the last three months.
 Month Production in units Manufacturing Supplies

March 450,000 P 723,060

April 540,000 853,560
May 480,000 766,560

5. Using the high-low method to develop a cost estimating equation, estimate the
needed manufacturing supplies for June.

6.Based on information provided, how much would be the estimated amount of total
fixed manufacturing costs for the second quarter of the year?

5.1.45 per production Cost and 70,560 Fixed Cost

6.70,560

7. and 8. Jackson, Inc., is preparing a budget for next year and requires a breakdown of
the cost of steam used in its factory into fixed and variable components. The following
data on the cost of steam used and direct labor hours worked are available for the last
six months:

Cost of Steam Direct Labor-Hours

July................. P 15,850 3,000
August............ 13,400 2,050
September..... 16,370 2,900
October.......... 19,800 3,650
November...... 17,600 2,670
December......    18,500  2,650
Total............... P101,520 16,920

7. If Jackson uses the high-low method of analysis, the estimated variable

cost of steam per direct labor hour would be:______
8. Formulate the cost predicting equation.

7. 0.25 per DLH

8. Y = 1300 + 1.25x

9. Shown below are units produced and total manufacturing costs for the past four
months at Minga Manufacturing Corporation:

Units Produced Total Cost

Jul............. 120 P446,000
Aug........... 150 P508,000
 Sep........... 180 P668,000
Oct............ 160 P574,000

Using a cost formula for total manufacturing cost under the high-low method, compute
for the estimated total variable costs for the four months given above.

9. 37000 per Units Produced

10. Elmwood Company had P300,000 overhead cost at 40,000 machine hours, and
P360,000 overhead cost at 60,000 hours. Total fixed overhead is_________.
10. 3 total Fixed Overhead