Problems 10-11

PROBLEM 11 Johnson Corporation is preparing a flexible budget and desires to separate its electricity expense, which is semi-variable and fluctuates with total machine hours, into its fixed and variable components. Information for the first three months of 2009 is as follows Month January February March Machine Hours 3,500 2,000 4,000 Electricity Expense P 31,500 20,000 35,600 Requirements 1. Compute the variable rate per machine hour. 2. Compute the fixed portion of Johnson's electricity expense 3. Compute the total manufacturing costs if Johnson's actual machine hours are 4,500. PROBLEM 12 Valdez Motors Co. makes motorcycles. Management wants to estimate overhead costs to plan its operations. A recent trade publication revealed that overhead costs tend to vary with machine hours. To check this, they collected the following data for the past 12 months. Month Machine Overhead HoursCosts 175 P 4,500 no. 170 4,225 160 4,321 190 5,250 175 2005,100 160 150 4,200 210 5,475 180 4,760 170 4,325 145 3,975 4,800 4,450 10 12 Requirements 1. Use the high-low method to estimate the fixed and variable portion of overhead costs based on machine hours. If the plant is planning to operate at a level of 300 machine hours next period, what would be the estimated overhead costs? Use the method of least square to estimate the fixed and variable portion of overhead costs based on machine hours. 2. 3