The following information is available regarding the total manufacturing overhead of Bursa Mfg. Co. for a recent four-month period

                                                                             Machine hours                                manufacturing overhead

Jan                                                                       5500                                                                             $311500

Feb                                                                       3200                                                                             224000

March                                                                 4900                                                                             263800

April                                                                    2800                                                                            184600

• Use the high-low method to determine:
•  1 . The variable element of manufacturing overhead costs per machine-hour.
•  2. The fixed element of monthly overhead cost.

b . Bursa expects machine-hours in May to equal 5,300. Use the cost relationships determined in part a to forecast May’s manufacturing overhead costs.

c . Suppose Bursa had used the cost relationships determined in part a to estimate the total manu-facturing overhead expected for the months of February and March. By what amounts would Bursa have over- or underestimated these costs?

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Answers 1 Variable manufacturing overhead cost per mac... View the full answer