6.) Selected data about Ruby Company's manufacturing operations at two levels of activity are given below: Number of units produced...........10,00015,000 Total manufacturing costs............$157,000$225,000 Direct material cost per unit.........$4$4 Direct labor cost per unit..............$6$6Required:Using the high-low method, estimate the cost formula for manufacturing overhead. Assume that both direct material and direct labor are variable costs.What is the purpose of knowing the cost formula?

The high low-cost method is a technique to know the fixed cost and variable from the given total…

Answered: 6.) Selected data about Ruby Company's…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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6.) Selected data about Ruby Company's manufacturing operations at two levels of activity are given below:

Number of units produced...........	10,000	15,000
Total manufacturing costs............	$157,000	$225,000
Direct material cost per unit.........	$4	$4
Direct labor cost per unit..............	$6	$6

Required:

Using the high-low method, estimate the cost formula for manufacturing overhead. Assume that both direct material and direct labor are variable costs.
What is the purpose of knowing the cost formula?

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