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 ofactivity over recent years are given below:Machine-hoursTotal factoryoverhead costsIndirect materials(variable)Rent (fixed)Maintenance (mixed)Total factory overheadcostsThe factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzedthese costs at the 62,200 machine-hours level of activity as follows:Level of ActivityLow62,200$36, 159, 600MaintenancecostFor planning purposes, the company wants to break down the maintenance cost into its variable and fixed costelements.Required:1. Estimate how much of the factory overhead cost of $40,519,600 at the high level of activity consists of maintenancecost.Y =+High82, 200$40,519,600$22,600,000$ 9,019,00018,100,0009,040,600$36, 159, 6002. Using the high-low method, estimate a cost formula for maintenance.X3. What total overhead costs would you expect the company to incur at an operating level of 67,200 machine-hours?Total factory overheadcosts

The costs incurred for the production are classified as fixed and variable costs. The variable costs…

Answered: Colby Limited is a manufacturing…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...

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SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
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 Y= 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. High $ 8,540,000 14,800,000 7,151,000 $30,491,000 X Total factory overhead costs 81,000…
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.…
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 61,000 Total Factory Overhead Cost 16,625,000 14,000,000 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 61000 hour level of activity as follows: Indirect Materials (Variable) Rent (Fixed) Maintenance (Mixed) 1,998,000 Total Factory overheads Cost 14,000,000 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements 90,000 5,002,000 7,000,000 Required: 1. Estimate how much of the $16,625,000 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it…
am. 106.
Echeverria SA is an Argentinian 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 (in Argentinian pesos) at high and low levels of activity over recent years are given below: Level of Activity Low High Machine hours 60,000 80,000 Total MOH costs 274,000 pesos 312,000 pesos The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 60,000 machine-hours level of activity as follows: Indirect Materials (variables) 90,000 Rent (fixed) 130,000 Maintenance (mixed) 54,000 Total Overhead Cost 274,000 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 312,000 pesos at the high level of activity consists of maintenance cost. 2. Using the high-low method,…
Younes Incorporated manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning this product are given below: Per Unit $ 220 $ 38 Selling price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling and administrative expense The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. What is the current contribution margin per unit for component P06 based on its selling price of $220 and its annual production of 4,000 units? $ 1 $ 8 $ 16 $ 4 $16
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Sardi Incorporated is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 12,600 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials $ 8.40 Direct labor 5.40 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 3.20 Unit product cost $ 18.20 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 35% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 1 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 2 minutes on this machine and that has a contribution margin of $4.80 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the…
Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used direct labor hours to assign manufacturing overhead to products, but it is trying to decide whether it should use a different allocation base such as direct labor dollars or machine hours. Actual and estimated data for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summarized here: Estimated Value Actual Value Manufacturing overhead cost $ 597,000 $ 658,000 Direct labor cost $ 399,000 $ 453,000 Direct labor hours 16,800 hours 18,300 hours Machine hours 7,800 hours 8,800 hours Required: Based on the company’s current allocation base (direct labor hours), compute the following:Predetermined overhead rate. Note: Round your answer to 2 decimal places. Applied manufacturing overhead. Note: Round your intermediate calculations to 2 decimal places and final answer…
Carver Company uses a plantwide overhead rate based on direct labor costs. Suppose that Carver raises its wage rate for direct labor during the year. How would that affect the overhead applied? The total cost of jobs?
XYZ Corporation has provided the following data concerning its overhead costs for the coming year: Wages and salaries Depreciation Rent Total The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: Activity Cost Pool Assembly Order processing Other Wages and salaries Depreciation $ 420,000 160,000 180,000 $760,000 Not Rent Total Activity 40,000 labor-hours 700 orders The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below: applicable Assembly 35% 15% 35% Activity Cost Pools Order Processing 30% 45% 30% The activity rate for the Order Processing activity cost pool is closest to: Other 35% 40% 35% Total 100% 100% 100%

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