Norde Company Is Making Plans for the Introduction of a New

question 92

Essay

Norde Company is making plans for the introduction of a new product, which has a target selling price of $7 per unit. The following estimates of manufacturing costs have been derived for 6 million units, to be produced during the first year:
Direct material: $6,000,000
Direct labor: $2,100,000 (at $14 per hour)
Overhead costs have not yet been estimated, but monthly data on total production and overhead for the past 12 months have been analyzed by using least-squares regression. The major overhead cost driver is direct labor hours, with the following results:
Computed values:
Fixed overhead cost: $3,200,000
Coefficient of independent variable: $2.25
Required:
A. Prepare the company's regression equation (Y = a + bX) to estimate overhead.
B. Calculate the predicted overhead cost at an activity level of 6,300,000 units.
C. What is Norde's dependent variable in this case?

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Definitions:

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors, driving individuals to pursue and achieve goals.

Desires And Needs

Fundamental motivations or urges that drive behavior, with needs being essential for survival and desires being wants or wishes.

Genuine Happy Smile

A true expression of happiness, characterized by the activation of the muscles around the eyes and mouth, also known as a Duchenne smile.

Feigned Smile

This term refers to a smile that is insincere or produced artificially, often to hide true feelings or conform to social expectations.