Sudbury Company Operates a Chain of Trendy Nail Salons

Essay

Sudbury Company operates a chain of trendy nail salons. The company's chief executive officer is interested in accumulating some information on the manufacturing overhead costs incurred by the company. You have been asked to analyze the following six months' worth of data.Manufacturing overhead No. of
Month cost Appointments
July $60,160 867
August 56,500 624
September 58,900 689
October 63,500 974
November 59,325 730
December 62,400 901
A regression analysis produced the following coefficients.
Intercept 42,900
X Variable 1 20.46
Required:
A. Using the results of regression, construct a cost formula for the total manufacturing overhead cost.
B. The CEO would like to limit total manufacturing overhead cost in future months to 20% of total revenues. Will that be possible if total revenues are expected to average $300,000 per month and total appointments per month are expected to average 1,000? Show all of your calculations.