Munir Hassan, Controller, Gathered Data on Overhead Costs and Direct

question 175

Essay

Munir Hassan, controller, gathered data on overhead costs and direct labour-hours over the past 12 months.List and discuss the different approaches Munir can use to estimate a cost function for overhead costs using direct labour-hours as the cost driver.

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Definitions:

Convertible Bonds

Convertible bonds are fixed-income securities that the holder can convert into a specified number of shares of the issuing company, usually at a pre-determined time.

Basic EPS

A measure of a company's profitability, calculated as net income divided by the number of outstanding shares of common stock; stands for Basic Earnings Per Share.

Diluted EPS

Earnings per share calculated using the potential conversion of dilutive securities, showing the possible decrease in earnings per share if these were converted.

Convertible Bonds

Bonds that can be converted into a predetermined number of shares of the issuing company's stock at certain times during their life, usually at the discretion of the bondholder.