Homework Help is Here – Start Your Trial Now!
Business
Accounting
Linda Olson owns a professional char- acter business in a large metropolitan area. She hires local college students to play these characters at children's parties and other events. Linda provides balloons, cupcakes, and punch. For a standard party the cost on a per-person basis is as follows: Balloons, cupcakes, and punch Labor (0.25 hour x $20 per hour) Overhead (0.25 hour x $40 per hour) Total cost per person 10 $22 Linda is quite certain about the estimates of the materials and labor costs, but is not as comfortable with the overhead estimate. The overhead estimate was based on the actual data for the past 9 months, which are presented here. These data indicate that overhead costs vary with the direct labor-hours used. The $40 estimate was determined by dividing total overhead costs for the 9 months by total labor-hours. Month April May Labor-Hours Overhead Costs $ 65,000 1,400 1,800 2,100 2,200 71,000 73,000 76,000 67,000 68,000 66,500 60,000 June July August September October 1,650 1,725 1,500 1,200 November December 1,900 15,475 72,500 $619,000 Total Linda has recently become aware of regression analysis. She estimated the following regression equation with overhead costs as the dependent variable and labor-hours as the independent variable: y = $43,563 + $14.66X

Linda Olson owns a professional char- acter business in a large metropolitan area. She hires local college students to play these characters at children's parties and other events. Linda provides balloons, cupcakes, and punch. For a standard party the cost on a per-person basis is as follows: Balloons, cupcakes, and punch Labor (0.25 hour x $20 per hour) Overhead (0.25 hour x $40 per hour) Total cost per person 10 $22 Linda is quite certain about the estimates of the materials and labor costs, but is not as comfortable with the overhead estimate. The overhead estimate was based on the actual data for the past 9 months, which are presented here. These data indicate that overhead costs vary with the direct labor-hours used. The $40 estimate was determined by dividing total overhead costs for the 9 months by total labor-hours. Month April May Labor-Hours Overhead Costs $ 65,000 1,400 1,800 2,100 2,200 71,000 73,000 76,000 67,000 68,000 66,500 60,000 June July August September October 1,650 1,725 1,500 1,200 November December 1,900 15,475 72,500 $619,000 Total Linda has recently become aware of regression analysis. She estimated the following regression equation with overhead costs as the dependent variable and labor-hours as the independent variable: y = $43,563 + $14.66X

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter5: Product And Service Costing: Job-order System
Section: Chapter Questions
Problem 9E: Reggie Wilmore has just started a new businessbuilding and installing custom garage organization...
See similar textbooks
icon
Related questions
Question

Using data from the regression analysis, what is the variable cost per person for a standard party?

Linda Olson owns a professional char- acter business in a large metropolitan area. She hires local college students to play these characters at children's parties and other events. Linda provides balloons, cupcakes, and punch. For a standard party the cost on a per-person basis is as follows: Balloons, cupcakes, and punch Labor (0.25 hour x $20 per hour) Overhead (0.25 hour x $40 per hour) Total cost per person 10 $22 Linda is quite certain about the estimates of the materials and labor costs, but is not as comfortable with the overhead estimate. The overhead estimate was based on the actual data for the past 9 months, which
Transcribed Image Text:Linda Olson owns a professional char- acter business in a large metropolitan area. She hires local college students to play these characters at children's parties and other events. Linda provides balloons, cupcakes, and punch. For a standard party the cost on a per-person basis is as follows: Balloons, cupcakes, and punch Labor (0.25 hour x $20 per hour) Overhead (0.25 hour x $40 per hour) Total cost per person 10 $22 Linda is quite certain about the estimates of the materials and labor costs, but is not as comfortable with the overhead estimate. The overhead estimate was based on the actual data for the past 9 months, which
are presented here. These data indicate that overhead costs vary with the direct labor-hours used. The $40 estimate was determined by dividing total overhead costs for the 9 months by total labor-hours. Month April May Labor-Hours Overhead Costs $ 65,000 1,400 1,800 2,100 2,200 71,000 73,000 76,000 67,000 68,000 66,500 60,000 June July August September October 1,650 1,725 1,500 1,200 November December 1,900 15,475 72,500 $619,000 Total Linda has recently become aware of regression analysis. She estimated the following regression equation with overhead costs as the dependent variable and labor-hours as the independent variable: y = $43,563 + $14.66X
Transcribed Image Text:are presented here. These data indicate that overhead costs vary with the direct labor-hours used. The $40 estimate was determined by dividing total overhead costs for the 9 months by total labor-hours. Month April May Labor-Hours Overhead Costs $ 65,000 1,400 1,800 2,100 2,200 71,000 73,000 76,000 67,000 68,000 66,500 60,000 June July August September October 1,650 1,725 1,500 1,200 November December 1,900 15,475 72,500 $619,000 Total Linda has recently become aware of regression analysis. She estimated the following regression equation with overhead costs as the dependent variable and labor-hours as the independent variable: y = $43,563 + $14.66X
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Pricing Decisions
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
SEE MORE TEXTBOOKS