Q.11). C6-69 Analyze cost behavior using a variety of methods (Learning Objectives 1, 2, 3, 4, & 5).
Braunhaus Microbrewery is in the process of analyzing its manufacturing overhead costs.
Braunhaus Microbrewery is not sure if the number of cases or the number of processing hours is the best cost driver of manufacturing overhead (MOH) costs. The following information is available :
Month
Manufacturing Overhead Costs
Processing Hours
cases
MOH Cost per Processing Hour
MOH Cost per Case
January
$29,500
680
8,000
$43.38
$3.69
February
27,800
575
6,750
48.35
4.12
March
24,500
500
5,500
49.00
4.45
April
29,000
600
7,250
48.33
4.00
May
28,000
650
7,800
43.08
3.59
June
29,570
710
5,600
41.90
5.31
Requirements
Are manufacturing overhead costs fixed, variable, or mixed? Explain.
Graph Braunhaus Microbrewery’s manufacturing overhead costs against processing hours. Use Excel or graph by hand.
Graph Braunhaus Microbrewery’s manufacturing overhead costs against cases produced. Use Excel or graph by hand.
Does the data appear to be sound, or do you see any potential data problems? Explain.
Use the high-low method to determine Braunhaus Microbrewery’s manufacturing overhead cost equation using processing hours as the cost driver. Assume that management believes all of the data to be accurate and wants to include all of it in the analysis.
Estimate manufacturing overhead costs if Braunhaus Microbrewery incurs 550 processing hours in July, using the results of the high-low analysis in Requirement 5.
Use Excel regression analysis to determine Braunhaus Microbrewery’s manufacturing over-head cost equation using processing hours as the cost driver. Comment on the R-square. Estimate manufacturing overhead costs if Braunhaus Microbrewery incurs 550 processing hours in July.
Use Excel regression analysis to determine Braunhaus Microbrewery’s manufacturing over head cost equation using number of cases produced as the cost driver. Use all…