Granger Corporation's high and low levels of activity last year were 50,000 units of product produced in June and 25,000 units produced in December. Machine maintenance costs were $140,000 in June and $80,000 in December. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 40,000 units.

Granger Corporation's high and low levels of activity last year were 50,000 units of product produced in June and 25,000 units produced in December. Machine maintenance costs were $140,000 in June and $80,000 in December. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 40,000 units.

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 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

See similar textbooks

Similar questions

Sheridan Company's high and low level activity last year was 56000 units of product produced in May and 18000 units produced in November. Machine maintenance cost were $162,600 in May and $63,800 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 35000 units.
Gribble Company's high and low level of activity last year was 60,000 units of product produced in May and 20,000 units produced in November. Machine maintenance costs were $156,000 in May and $60,000 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 45, 000 units.
The cost formula for the maintenance department of Rambo Limited is $19,200 per month plus $7.50 per machine hour used by the production department. Required: a. Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used. b. Prepare an appropriate performance report for the maintenance department assuming that 7,100 machine hours would be used in the month of May and that the total actual maintenance cost incurred in May was $68,950. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used. Maintenance cost
The cost formula for the maintenance department of Rainbow Ltd. is $19,400 per month plus $7.70 per machine hour used by the production department.Required:a. Calculate the maintenance cost that would be budgeted for a month in which 6,700 machine hours are planned to be used. b. Prepare an appropriate performance report for the maintenance department assuming that 7,060 machine hours were actually used in the month of May and that the total maintenance cost incurred was $68,940. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
The cost formula for the maintenance department of the Eifel Co. is $6,500 per month plus $3.50 per machine hour used by the production department. a. Calculate the maintenance cost that would be budgeted for the month of May in which 5,700 machine hours are planned to be used. b. Prepare an approproate performance report for the maintenance department assuming that 5,860 machine hours were actually used in the month of May, and the total maintenance cost inccured was $28,010.
Fanning Corporation estimated its overhead costs would be $22,100 per month except for January when it pays the $207,120 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $229,220 ($207,120 + $22,100). The company expected to use 7,700 direct labor hours per month except during July, August, and September when the company expected 9,700 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company’s actual direct labor hours were the same as the estimated hours. The company made 3,850 units of product in each month except July, August, and September, in which it produced 4,850 units each month. Direct labor costs were $23.10 per unit, and direct materials costs were $10.30 per unit.Required Calculate a predetermined overhead rate based on direct labor hours. Determine the total allocated overhead cost for January, March, and August. Determine the…
Fanning Corporation estimated its overhead costs would be $22,100 per month except for January when it pays the $207,120 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $229,220 ($207,120 + $22,100). The company expected to use 7,700 direct labor hours per month except during July, August, and September when the company expected 9,700 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company’s actual direct labor hours were the same as the estimated hours. The company made 3,850 units of product in each month except July, August, and September, in which it produced 4,850 units each month. Direct labor costs were $23.10 per unit, and direct materials costs were $10.30 per unit.Required Calculate a predetermined overhead rate based on direct labor hours. Determine the total allocated overhead cost for January, March, and August. Determine the…
Brentwood Manufacturing forecasts that total overhead for the current year will be $12,000,000 and that total machine hours will be 240,000 hours. Year to date, the actual overhead is $13,200,000, and the actual machine hours are 260,000 hours. Suppose Brentwood Manufacturing uses a predetermined overhead rate based on machine hours for applying overhead as of this point in time (year to date). In that case, the overhead is?
pharoah company estimates that it will produce 6,000 units of product I0a during the current month. budgeted variable maanufactoring costs per materila $8, direct labour $13, and overhead fixed manufactoring overhead cost are 7,700 for depreciation and $3,700 for supervision. in the current month , pharoah actually produced 6,500 units and incured the following cost:direct materials $44,976, direct labour $76,400, variable overhead $122,094, depreciation$7,700, and supervision $3,959. prerpare a static budget report.
Rasmussen Corporation expects to incur indirect overhead costs of $80,000 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of the year are as follows. January February March April Estimated production in units 6,000 7,000 3,000 4,000 Required Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. Allocate overhead costs to each month using the overhead rate computed in Requirement a. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.
Brentwood Manufacturing forecasts that total overhead for the current year will be $12,000,000 and that total machine hours will be 240,000 hours. Year to date, the actual overhead is $13,200,000, and the actual machine hours are 260,000 hours. Suppose Brentwood Manufacturing uses a predetermined overhead rate based on machine hours for applying overhead as of this point in time (year to date). In that case, the overhead is? Help
A company estimates its manufacturing overhead will be $525,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? When required, round your answers to nearest cent. A. Budgeted direct labor hours: 42,000 per direct labor hour B. Budgeted direct labor expense: $1,050,000 per direct labor dollar C. Estimated machine hours: 70,000 per machine hour