Question

Nurally Inc. manufactures a single product. Selected data from the company’s cost records for two recent months are given below:
The company’s manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning, management wants to determine how much of the over- head cost is variable with units produced and how much of it is fixed per year.
Required:
1. For both July and October, estimate the amount of manufacturing overhead cost added to production. The company had no underapplied or overapplied overhead in either month.
2. Using the high–low method, estimate a cost formula for manufacturing overhead. Express the variable portion of the formula in terms of a variable rate per unit of product.
3. If 9,500 units are produced during a month, what will the cost of goods manufactured be? (Assume that the company’s beginning work in process inventory for the month is $16,000 and that its ending work in process inventory is $19,000. Also assume that there is no underapplied or overapplied overhead cost for the month.)


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  • CreatedJuly 08, 2015
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