Crosshill Company's total overhead costs at various levels of activity are presented below: Total Overhead Cost...
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Crosshill Company's total overhead costs at various levels of activity are presented below: Total Overhead Cost $202,600 $180,900 $224,300 $246,000 Month April May June July Machine-Hours 70,000 60,000 80,000 90,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000-machine-hour level of activity in May is as follows: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 50,400 21,000 109,500 $180,900 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Round the "Variable cost per unit" to 2 decimal places.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Round the "Variable cost per unit" to 2 decimal places.) High activity level Low activity level Change Variable cost element Fixed cost element Machine- Hours Maintenance Cost 0 $ X per MH 0 3. Express the company's total overhead cost in the form Y = a +bX. (Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine-Hour Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost Y = + Total overhead cost $ X 0.00 $ Fixed Cost 0 4. What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours? (Round the "Variable cost per unit" to 2 decimal places.) Crosshill Company's total overhead costs at various levels of activity are presented below: Total Overhead Cost $202,600 $180,900 $224,300 $246,000 Month April May June July Machine-Hours 70,000 60,000 80,000 90,000 Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000-machine-hour level of activity in May is as follows: Utilities (variable) Supervisory salaries (fixed) Maintenance (mixed) Total overhead cost $ 50,400 21,000 109,500 $180,900 The company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the $246,000 of overhead cost in July was maintenance cost. (Hint: To do this, first determine how much of the $246,000 consisted of utilities and supervisory salaries. Think about the behaviour of variable and fixed costs within the relevant range.) (Round the "Variable cost per unit" to 2 decimal places.) Maintenance cost in July 2. Using the high-low method, estimate a cost formula for maintenance. (Round the "Variable cost per unit" to 2 decimal places.) High activity level Low activity level Change Variable cost element Fixed cost element Machine- Hours Maintenance Cost 0 $ X per MH 0 3. Express the company's total overhead cost in the form Y = a +bX. (Round the "Variable cost per unit" to 2 decimal places.) Variable Cost per Machine-Hour Utilities cost Supervisory salaries cost Maintenance cost Total overhead cost Y = + Total overhead cost $ X 0.00 $ Fixed Cost 0 4. What total overhead cost would you expect to be incurred at an activity level of 75,000 machine-hours? (Round the "Variable cost per unit" to 2 decimal places.)
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Related Book For
Managerial Accounting
ISBN: 9781259275814
11th Canadian Edition
Authors: Ray H Garrison, Alan Webb, Theresa Libby
Posted Date:
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