Boswana Company incurred the following costs and machine hours for the months of June and July: Type of cost June July Insurance $10,000 $10,000 Factory supplies 3,000 4,500 Direct labor 20,000 30,000 Maintenance 5,500 5,750 Machine hours June July Machine hours 1,000 1,500 A. Assuming that the driver for all costs is machine hours, determine the cost behavior of each of the four given types of costs (fixed, variable, or mixed). Line Item Description Costs Type Insurance Factory Supplies Direct Labor Maintenance B. Assume that the following is the cost formula for maintenance cost. Total Maintenance Cost = $5,000 + ($0.50 x No. of Machine Hours) Construct a cost formula to be used to estimate total monthly costs within the relevant range. Total Costs = Fixed Costs + Variable Costs = $fill in the blank 5 + ($fill in the blank 6 per Unit × No. of Machine Hours) C. Estimate the total monthly costs to be incurred by Boswana Company at a level of 1,200 machine hours.fill in the blank 1 of 1$
Boswana Company incurred the following costs and machine hours for the months of June and July: Type of cost June July Insurance $10,000 $10,000 Factory supplies 3,000 4,500 Direct labor 20,000 30,000 Maintenance 5,500 5,750 Machine hours June July Machine hours 1,000 1,500 A. Assuming that the driver for all costs is machine hours, determine the cost behavior of each of the four given types of costs (fixed, variable, or mixed). Line Item Description Costs Type Insurance Factory Supplies Direct Labor Maintenance B. Assume that the following is the cost formula for maintenance cost. Total Maintenance Cost = $5,000 + ($0.50 x No. of Machine Hours) Construct a cost formula to be used to estimate total monthly costs within the relevant range. Total Costs = Fixed Costs + Variable Costs = $fill in the blank 5 + ($fill in the blank 6 per Unit × No. of Machine Hours) C. Estimate the total monthly costs to be incurred by Boswana Company at a level of 1,200 machine hours.fill in the blank 1 of 1$
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
Related questions
Question
Boswana Company incurred the following costs and machine hours for the months of June and July:
| Type of cost | June | July |
|---|---|---|
| Insurance | $10,000 | $10,000 |
| Factory supplies | 3,000 | 4,500 |
| Direct labor | 20,000 | 30,000 |
| Maintenance | 5,500 | 5,750 |
| Machine hours | June | July |
|---|---|---|
| Machine hours | 1,000 | 1,500 |
A. Assuming that the driver for all costs is machine hours, determine the cost behavior of each of the four given types of costs (fixed, variable, or mixed).
| Line Item Description | Costs Type |
|---|---|
| Insurance |
|
| Factory Supplies |
|
| Direct Labor |
|
| Maintenance |
|
B. Assume that the following is the cost formula for maintenance cost.
Total Maintenance Cost = $5,000 + ($0.50 x No. of Machine Hours)
Construct a cost formula to be used to estimate total monthly costs within the relevant range.
| Total Costs | = | Fixed Costs | + | Variable Costs |
|---|---|---|---|---|
| = | $fill in the blank 5 | + | ($fill in the blank 6 per Unit × No. of Machine Hours) |
C. Estimate the total monthly costs to be incurred by Boswana Company at a level of 1,200 machine hours.
fill in the blank 1 of 1$
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