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The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four month period:
| Machine Hours | Manufacturing Overhead | |||
| Jan. | 5,600 | $ | 310,000 | |
| Feb. | 3,200 | 224,000 | ||
| Mar. | 4,900 | 263,800 | ||
| Apr. | 2,500 | 180,000 | ||
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| a 1 |
Use the high low method to determine the variable element of manufacturing overhead costs per machine hour. (Round your answer to 2 decimal places. Omit the “$” sign in your response.) |
| Manufacturing overhead cost | $ | per machine hour |
| a 2 |
Use the high low method to determine the fixed element of monthly overhead cost. (Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.) |
| Fixed element of manufacturing overhead | $ |
| b. |
Bursa expects machine hours in May to equal 5,300. Use the cost relationships determined in part a to forecast May’s manufacturing overhead costs. (Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.) |
| Estimated manufacturing overhead | $ |
| c. |
Suppose Bursa had used the cost relationships determined in part a to estimate the total manufacturing overhead expected for the months of February and March. By what amounts would Bursa have over or underestimated these costs? (Negative amounts should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.) |
| Amount over (under) estimated | |
| February | $ |
| March | $ |