Burmer CoHas Accumulated Data to Use in Preparing Its Annual Profit

question 108

Multiple Choice

Burmer Co.has accumulated data to use in preparing its annual profit plan for the upcoming year.The cost behavior pattern of the maintenance costs must be determined.Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:
A staff assistant has run regression analyses on the data and obtained the following output using Excel:
The F statistic is calculated by:

• A)Determining the square root of sum of squares for the regression.
• B)Using the square root of both the sum of squares and mean sum of squares for the regression.
• C)Using the mean sum of squares of the regression and mean sum of squares for the errors.
• D)Using the sum of squares for the errors and the square root of the sum of squares for the regression. F = Mean sum of squares/mean square error

---

Definitions:

Estimated Overhead Cost

Estimated overhead cost refers to the projected expenses related to manufacturing overhead or indirect costs that are expected to be incurred over a specified period.

Predetermined Overhead Rates

A rate calculated prior to the accounting period that is used to apply manufacturing overhead costs to products or job orders, based on an estimated amount of allocation base.

Accounting Period

A specific period of time used for financial reporting and analysis, often a quarter or a year.

Estimates

Approximations used in accounting when precise data is unavailable, often used for calculating allowances for doubtful accounts or depreciation.