Question Details

Tessmer Manufacturing Company produces inventory



Tessmer Manufacturing Company produces inventory in a highly automated assembly plant in Olathe, Kansas. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operations, the following data were collected: 

	Machine-hours	Kilowatt-hours	Total Overhead Costs
	January	4,560	5,424,000	$405,600
	February	4,380	5,208,000	404,160
	March	4,680	5,400,000	407,040
	April	3,960	5,148,000	404,160
	May	3,900	5,040,000	391,200
	June	3,720	4,944,000	384,000

Required: 
a.	Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.
b.	Use the high-low method to determine the estimating cost function with kilowatt-hours as the cost driver.
c.	For July, the company ran the machines for 4,000 hours and used 4,550,000 kilowatt-hours of power. The overhead costs totaled $365,000. Which cost driver was the best predictor for July?




Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help