MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2A, Problem 2A.8P
High-Low Method; Predicting Cost LO2—10
Nova Company’s total
Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 machine-hour level of activity is:
Nova Company’s management wants to break down the maintenance cost into its variable and fixed cost elements.
Required:
- Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs.)
- Using the high-low method, estimate a cost formula for maintenance in the form
- Express the company’s total overhead cost in the form
- What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
ok
int
erences
Required information
[The following information applies to the questions displayed below.]
1
T
Mc
Graw
Hill
Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000
units, its average costs per unit are as follows:
A
Q
N
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Fixed selling expense
Fixed administrative expense
Sales commissions
Variable administrative expense
Total manufacturing overhead cost
Manufacturing overhead per unit
11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production?
What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places.)
@
2
W
S
X
H
7316
command
#3
E
D
3
C
$
4
-
M
2023-01...0.40 PM 2023-01...2.52 PM 2022-12.6.4
(
- C
9
K
O
)
LO
<
H
L
4)
I'
P
V
CO
-
CA
{
I
+
[
E
command optio:
Required information [The following information applies to the questions displayed below.] ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard
overhead cost information for one unit of this product is presented below: Required: 1. Calculate the fixed overhead application rate per machine hour using (a) budgeted output, (b)
normal capacity, and (c) practical capacity. (Round your answers to 2 decimal places.) 2. What is the total overhead application rate per machine hour for each of the three choices identified
in requirement 1 ? (Round your answers to 2 decimal places.) 3. What is the total overhead varlance for the year when the overhead application rate per machine hour is determined under
each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Indicate whether each variance is favorable (F) or unfavorable (U), (Do not round
intermediate calculations. Round your answers to the nearest whole dollar…
Characteristics of Production Process, Cost Measurement
Vince Melders, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state.
Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated the following for the year:
Number of direct labor hours
6,720
Direct labor cost
$67,200
Overhead cost
$50,400
During the year, the following actual amounts were experienced:
Number of direct labor hours
6,045
Direct labor incurred
$66,495
Overhead incurred
$50,500
Required:
1. Should EcoScape use process costing or job-order costing?
2. If EcoScape uses a normal costing system and overhead is applied on the basis of direct labor hours,
What is the overhead rate? Round your answer to the nearest cent.
per direct labor hour
Chapter 2A Solutions
MANAGERIAL ACCOUNTING F/MGRS.
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Determine fixed and variable costs using the high-low method and prepare graph. E2.26 (LO 3) The controller of Furgee Industries has collected the following monthly expense data for use in analyzing the cost behaviour of maintenance costs. Total Maintenance Costs Total Machine Hours Month January February March April May June $2,500 3,000 3,600 4,500 3,200 4,900 300 350 500 690 400 700 Instructions a. Determine the fixed and variable cost components using the high-low method. b. Prepare a graph showing the behaviour of maintenance costs, and identify the fixed and variable cost components. Use 100-hour increments and $1,000 cost increments.arrow_forwardRequired information [The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: @ 2 6. If 12,500 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.) Direct materials Direct labor S Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Total variable cost W 00 Xx # 3 E D C $ 4 R FL 1 1 ( 2023-01...0.40 PM 2023-01...2.52 PM 2022-12 9 M A ^ K O 0 J € Ch Parrow_forwardAccording to following information, which of the following is the total cost function in the form of Y = F+V*X? Number of units produced is 18,000. Fixed Variable Cost Cost Material used in Production 88,000 40,000 Labour used in Production 42,000 38,500 Production Facilities cost 37,000 29,500 TOTAL COST 167,000 108,0OC Select one: • a. Y = 167,000+V*6 Ob. Y 167,000+V*18 c. Y = 275,000+V*108 O d. Y = 108,000+V*275arrow_forward
- A B C D 1 The cost data for Evencoat Paint for the year 2019 is as follows: 2 Equipment 3 Gallons of Paint Maintenance Month Produced Expense 4 Jan 110,000 $70,700.00 5 Feb 68,000 $66,800.00 60 Mar 71,000 $67,000.00 7 Apr 77,000 $68,100.00 ос 8 May 95,000 $69,200.00 9 Jun 101,000 $70,300.00 10 Jul 125,000 $70,400.00 11 Aug 95,000 $68,900.00 12 Sep 95,000 $69,500.00 13 Oct 89,000 $68,600.00 14 Nov 128,000 $72,800.00 15 Dec 122,000 $71,450.00arrow_forwardCurrent Attempt in Progress In Robert's manufacturing plant, the estimated monthly overhead cost function is provided in the Y = m(X) + b format: Total monthly overhead costs = $1.15(number of machine hours) + $6,500. Given this cost function, specify (a) the variable cost, (b) the fixed cost, (c) the cost driver, and (d) whether these monthly overhead costs are considered variable, fixed, or mixed in total. (Round variable cost to 2 decimal places, e.g. 15.25.) Variable cost Fixed cost Cost driver Cost type $ $arrow_forward1 Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.40 for direct materials and $0.95 for direct labor. Incremental overhead to make this part is $1.48 per unit. The company can buy the part for $4.02 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should: Make Buyarrow_forward
- Identify cost graphs The following cost graphs illustrate various types of cost behaviour: a. Total direct material cost b. Electricity costs of $1,000 per month plus 50.10 per Kilowatt-hour c. Per unit cost of straight-line depreciation on factory equipment d. Salary of quality control superbisor, 520,000 per month e. Per-unit direct labor costarrow_forwardEvaluating Selected Cost Driver Assume that a manufacturer of specialized machine parts developed the following total cost estimating equation for manufacturing costs. Y = $14,400 + $1,250 (actual units) a. What is total estimated manufacturing costs if 180 units are produced? $Answer 0arrow_forwardWhat is the difference in the cost of Widget A, per product, using a traditional labor allocation vs. activity based costing method, assuming the three main cost activities are: Widget A Widget B Total Direct labor hours 300 600 900 Machine hours 100 150 250 Purchase orders = 50 50 100 Here are the summary of fixed costs to consider allocating: Payroll taxes $1,700 Machine maintenance $750 Purchasing Dept. labor $3.500 Fringe benefits $1.500 Purchasing Dept. Supplies $300 Equipment depreciation $1,000 Electricity $1,500 Unemployment insurance $1,300 Traditional method OVER estimates the cost of Product A by $850 Traditional method UNDER estimates the cost of Product A by $850 Traditional method OVER estimates the cost of Product A by $1600 O Traditional method UNDER estimates the cost of Product A by $1600arrow_forward
- 3. The expected costs for the Maintenance Department Fixed costs (salaries, tools): Variable costs (supplies): Estimated usage by: Assembly Department Fabricating Department Packaging Department Total maintenance hours Actual usage by: Assembly Department Fabricating Department Packaging Department Total maintenance hours of Stazler, Inc., for the coming year include: $64,900 per year $1.35 per maintenance hour 4,500 6,700 10,800 22,000 3,960 6,800 10,000 20,760 i. Calculate a single charging rate for the Maintenance Department. ii. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year.arrow_forwardLearned Corporation has provided the following information: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales commissions a. Total product cost b. Total period cost Cost per Unit Cost per Period $ 5.80 $ 4.00 $ 1.60 c. Contribution margin per unit d. Total direct manufacturing cost e. Total indirect manufacturing cost $ 0.70 $ 0.60 Variable administrative expense Fixed selling and administrative expense Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units? b. For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units? c. If the selling price is $23.30 per unit, what is the contribution margin per unit sold? Note: Round your answer to 2 decimal places. d. If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred? e. If 7,000 units are produced, what is the total amount of indirect manufacturing…arrow_forwardQuestion 5: The Information below is taken from production department of Salalah Company for April: The number of units produced is 10000. All amounts are in OMR. Total Costs Variable Cost Fixed Cost Direct material cost 500000 ? Total labor cost Manufacturing Overhead ? 400000 100000 90000 30000 ? Calculate: A. B. Calculate cost per unit B. Describe the production costs in the equation form Y = f+ vX. C. Assume Salalah intends to produce 10000 units next month. Calculate total production costs for the montharrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Pricing Decisions; Author: Rutgers Accounting Web;https://www.youtube.com/watch?v=rQHbIVEAOvM;License: Standard Youtube License