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 225 direct labor hours are expected to be used in the upcoming period? (rounded to the nearest whole dollar)
A)$10,534
B)$9,882
C)$9,230
D)$8,617

Question

Quizplus · Accepted Answer

Using the regression equation, we can estimate the overhead cost as follows:
Overhead Cost = Intercept + (Direct Labor Hours x Regression Coefficient)
Overhead Cost = 17,809 - (65.837 x 225)
Overhead Cost ≈ $9,882 (rounded to the nearest whole dollar)

The Cost Accountants at the Doering Company Regressed Total Overhead