Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of Indirect materials, rent, and maintenance. The company has analyzed these costs at the 61,000 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 61,000 $30,491,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $34,611,000 at the high level of activity consists of maintenance cost. Y = High 81,000 $34,611,000 $ 8,540,000 14,800,000 7,151,000 $30,491,000 2. Using the high-low method, estimate a cost formula for maintenance. X Total factory overhead costs 3. What total overhead costs would you expect the company to incur at an operating level of 66,000 machine-hours?

Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of Indirect materials, rent, and maintenance. The company has analyzed these costs at the 61,000 machine-hours level of activity as follows: Maintenance cost Level of Activity Low 61,000 $30,491,000 For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $34,611,000 at the high level of activity consists of maintenance cost. Y = High 81,000 $34,611,000 $ 8,540,000 14,800,000 7,151,000 $30,491,000 2. Using the high-low method, estimate a cost formula for maintenance. X Total factory overhead costs 3. What total overhead costs would you expect the company to incur at an operating level of 66,000 machine-hours?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...

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Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?
Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 62,200 machine-hours level of activity as follows: Level of Activity Low 62,200 $36, 159, 600 Maintenance cost For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $40,519,600 at the high level of activity consists of maintenance cost. Y = + High 82, 200 $40,519,600 $ 22,600,000 $ 9,019,000 18,100,000 9,040,600 $36, 159, 600 2.…
Colby Limited is a manufacturing company whose total factory overhead costs fluctuate somewhat from year to year, according to the number of machine-hours worked in its production facility. These costs at high and low levels of activity over recent years are given below: Machine-hours Total factory overhead costs Indirect materials (variable) Rent (fixed) Maintenance (mixed) Total factory overhead costs The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 60,500 machine-hours level of activity as follows: Maintenance cost $ 8,561,500 Y= Level of Activity Low For planning purposes, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required: 1. Estimate how much of the factory overhead cost of $38,139,000 at the high level of activity consists of maintenance cost. 60,500 $34,179,000 X Total factory overhead costs High 80,500 $38, 139,000 $ 9,377,500 17,100,000…
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Direct Labor Hours 50,000 75,000 Total Factory Overhead Cost 16,250,000 20,000,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 50,000-hour level of activity as follows: Indirect Materials (Variable) 5,000,000 Rent (Fixed) 8,000,000 Maintenance (Mixed) 3,250,000 Total Factory overheads Cost 16,250,000 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements Required: 1. Estimate how much of the 20,000,000 factory overhead cost at the high level of activity consists of maintenance cost.…
am. 106.
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