Argo Company Ran a Regression Analysis Using Direct Labor Hours

question 53

Essay

Argo Company ran a regression analysis using direct labor hours as the independent variable and manufacturing overhead costs as the dependent variable. The results are summarized below:
$$\begin{array} { l c c } \text { Intercept } & \$ 14,600 \\\text { Slope } & \$ 12.55 \\\text { Correlation coefficient } & 0.931 \\\text { R-squared } & 0.867\end{array}$$
Argo is planning on operating at a level that would require 12,000 direct labor hours per month in the upcoming year.
Required:
(a.) Use the information from the regression analysis to write the cost estimation equation for the manufacturing overhead costs.
(b.) Compute the estimated manufacturing overhead costs per month for the upcoming year.

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Definitions:

Mining Exploration

The process of searching for minerals or precious metals in the Earth's crust, typically involving surveying, drilling, and sampling.

Prospectus Requirement

A legal obligation for companies to disclose detailed financial information before issuing stock to the public.

Regular Series

A regular series refers to a sequence or collection of events, objects, or publications that follow a consistent and predefined arrangement or schedule.

Market Value

The amount of money a buyer is willing to pay and a seller is willing to accept for an asset or item under current market conditions.